Bloomberg News

December Carbon Open Interest on ICE Falls as Positions Roll

November 07, 2012

Open interest in December futures contracts for European Union emissions permits and United Nations carbon offsets is declining as traders roll, or shift, their positions into 2013 contracts.

Open interest in the December EU permit contract was 3512 million metric tons yesterday, a drop of 7.3 percent from its peak of 378 million on Sept. 24, ICE Futures data show. Open positions in the 2013 contract rose 15 percent in the period to 445 million tons.

Traders sometimes choose to maintain positions in the most liquid contract, which in carbon is the one for the nearest December. At expiry, they may either make or take delivery of the underlying asset or cancel the holding by buying or selling to balance their book and opening a position in a later contract.

Open interest on ICE Futures for UN offsets for delivery in December have dropped almost 16 percent from a peak on Oct. 8, with interest in the December 2013 contract gaining 2.8 percent over the same period.

For the March 2013 CER contract, the last in which many UN offsets will be eligible in the EU’s carbon market, open interest has jumped 36 percent since Oct. 8 as traders seek to sell these credits before they lose compliance value in April.

To contact the reporter on this story: Alessandro Vitelli in London at avitelli1@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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