ETF Securities Limited is about to list the world’s first Carbon ETC on the London Stock Exchange (LSE) in the dedicated ETC segment. ETFS Carbon offers investors the opportunity to gain direct exposure to the carbon emissions allowance futures market. It is expected that the first day of trading will be Thursday 30th October.
ETFS Carbon (LSE Code: CARB) is designed to track the ICE ECX EUA Futures Contract, which is currently the most liquid exchange traded contract within the EU Emissions Trading Scheme (“EU ETS”). Each ETFS Carbon is initially equivalent to one emissions allowance; the holder of an emissions allowance owns the right to emit one tonne of carbon dioxide equivalent gas. On the LSE, ETFS Carbon will trade in both Euros (CARB) and also in British pence (CARP) on the London Stock Exchange. Each ETFS Carbon will begin trading at approximately EUR 18.37 (£14.74).
Carbon emissions allowance trading markets have developed as part of the international response to concerns over the environmental effects of increasing global greenhouse gas (GHG) emissions, in particular carbon dioxide (CO2). The Kyoto Protocol (1997) provides a framework for the reduction of global GHG emissions through the establishment of emissions trading schemes. In January 2008, the European Commission announced proposals to improve and extend the EU ETS post-2012. The EU ETS is currently the largest and most liquid GHG trading market, with approximately 80% of global turnover in CO2 allowances and credits in 2007. Total EU ETS trading activities were valued at approximately EUR 30 billion in the first half of 2008, equivalent to 750 million tonnes of CO2, an increase of 80% over the same period in 2007. Germany, UK and Italy are currently in the list of the top ten emitters in the world.
ETFS Carbon is the newest ETC to be added to the range of ETCs issued by ETFS Oil Securities Limited. These are backed by matching Energy Contracts purchased from an entity of Shell Trading, which is the principal trading and shipping business within the Shell Group. There are now nine ETCs issued by ETFS Oil Securities Limited.
Commenting on the launch of Carbon Securities, Nik Bienkowski, Chief Operating Officer of ETF Securities, said: "ETCs were designed to be simple and accessible tools for all types of investors. Currently most investors cannot invest in carbon emissions allowance futures due to limited market access, but our response to this problem in the form of ETFS Carbon creates a practical and accessible answer for investors.”
Smart beta isn’t smarter than cap weighting, but it is different, and that’s great for investors.
Trial by fire is one way to discover why ETF transparency matters.
Most people now realize leveraged ETFs can hurt you, but how, then, to use them?
What would a shift out of a mutual fund and into an ETF look like up close?