ASX to list Environmental Futures in July 2024

Wed 15 May 2024

As per ASX Notice 0523.24.05, Market Participants are advised that ASX intends to launch a suite of Environmental Futures products on the ASX 24 Market to support Australia and New Zealand’s energy transition and decarbonisation efforts. Environmental Futures will provide a transparent forward curve out to five years, sending important price signals for risk management and investment.

ASX plans to list three deliverable Environmental Futures contacts, subject to final internal and regulatory approvals and external readiness. The contracts are:

Australian Carbon Credit Unit (ACCU) Futures;
Large Generation Certificate (LGC) Futures; and
New Zealand Unit (NZU) Futures.

Key Features

Transparent forward curve – Environmental Futures may improve price and data transparency by creating a liquid forward curve out to 5 years that is readily tradable and based on transaction and/or bid-offer data.
Standardised – Each futures contract is generic with one future equal to 1,000 tonnes of CO2 equivalent not released into the atmosphere.[1]
Deliverable –Those holding positions at expiry will be required to either deliver or take delivery of underlying certificates or units with ASX facilitating end-to-end delivery to maintain anonymity throughout the trading lifecycle.

Timeline – subject to internal/external readiness and regulatory approval

The listing date for ACCU, LGC and NZU Futures is late July 2024. The go-live date will be confirmed via market notice in late June/early July following receipt of all relevant approvals.

Testing

The contracts will be available in the ASX CDE test environment from the 14th May – 15th July 2024. Trading and Clearing Participants are encouraged to test their access and set up prior to go-live.

Draft Contract Specifications

Specifications	ACCU Futures	LGC Futures	NZU Futures
ASX contract code	CA	CL	CN
Underlying	Australian Carbon Credit Units, which represent one tonne of carbon dioxide equivalent (CO2) greenhouse gas that is not released into the atmosphere	Large-scale Generation Certificates, which represent one megawatt hour (MWh) of renewable energy generation	New Zealand Units (NZU’s), which represent one tonne of carbon dioxide equivalent (CO2) greenhouse gas that is not released into the atmosphere
Contract unit	1 Futures contract is equal to 1,000 underlying units (ACCU’s)	1 Futures contract is equal to 1,000 underlying certificates (LGC’s)	1 Futures contract is equal to 1,000 underlying units (NZU’s)
Deliverable units	All ACCU’s eligible for government surrender	All LGC’s eligible for government surrender, with the exception of wood waste and applying the Vintage Rule[2]	All NZU’s eligible for government surrender
Contract months	March, up to 5 years ahead (annual listing) with the first contract March 2025	January, up to 5 years ahead (annual listing) with the first contract January 2025	May, up to 5 years ahead (annual listing) with the first contract May 2025
Trading hours	10:00am – 4:00pm AEST/AEDT	10:00am – 4:00pm AEST/AEDT	10:30am – 4:00pm NZST/NZDT
Registry (for delivery)	Australian National Registry of Emissions Units (ANREU)	Renewable Energy Certificate (REC) registry	New Zealand Emissions Trading Register (NZETR)
Settlement method	Deliverable. ACCU’s must be delivered into the ASX ANREU account by no later than 4:30pm (AEST/AEDT) on the second Business Day following the Final Trading Day	Deliverable. LGC’s must be delivered into the ASX REC account by no later than 4:30pm (AEST/AEDT) on the second Business Day following the Final Trading Day	Deliverable. NZU’s must be delivered into the ASX NZETR account by no later than 4:30pm (NZST/NZDT) on the second Business Day following the Final Trading Day
Final Trading Day	4th March or, if 4th March is not a Business Day, the next Business Day	27th January or, if 27th January is not a Business Day, the next Business Day	4th May or, if 4th May is not a Business Day, the next Business Day
Settlement Day	Three Business Days following the Final Trading Day	Three Business Days following the Final Trading Day	Three Business Days following the Final Trading Day
Price quotation	AUD $0.01	AUD $0.01	NZD $0.01
Blocks/EFP’s	Yes (block minimum 25 lots)	Yes (block minimum 25 lots)	Yes (block minimum 25 lots)
Trading fee	AUD $50 per lot	AUD $50 per lot	NZD $50 per lot
Bloomberg code	AAOA Comdty	LCAA Comdty	UNSA Comdty
Refinitiv code	0#YCA	0#YCQ	0#NCN

Delivery process and timings

Environmental Futures are deliverable into the ASX Clear (Futures) account maintained at the relevant registry. ASX Clear (Futures) will effect delivery with Clearing Participants acting on behalf of end clients. The delivery process occurs over a period of 3 – 4 days.

Clearing Participants are ultimately responsible for client open positions at the time of contract expiry. To be a party to delivery, Clearing Participants must maintain an account at the relevant registry. Clearing Participants that do not maintain an account at the registry must have appropriate processes and procedures in place to ensure close out of any open client positions prior to market close on the Final Trading Day and must provide an attestation to this effect (in a form prescribed by ASX Clear (Futures)).

Key delivery and settlement timings for ACCU’s and LGC’s

Day	Time (AEST/AEDT)	Details
Final Trading Day	12:00pm	On market trading ceases
	12:00pm	Clearing Participants may commence transfer of Certificates or Units to ASX registry account to cover short positions
	12:00pm – 5:00pm	Special blocks (1 lot minimum) are available to close out open positions
	5:30pm	Clearing Participants to notify ASX of delivery intentions
Final Trading Day + 2	4:30pm	Clearing Participants with short positions must ensure eligible Certificates or Units have been transferred to the nominated ASX account within the relevant registry
	5:00pm	ASX Clearing Operations runs final reconciliation
	5:30pm	ASX Clearing Operations sends invoice to Clearing Participants
Final Trading Day + 3	10:30am	Buyer payments to be made by 10:30am (via Austraclear)
	12:30pm	ASX to transfer payment to sellers
	From 2:30pm	ASX to commence transfer of Certificates or Units to buyers

Key delivery and settlement timings for NZU’s

Day	Time (NZST/NZDT)	Details
Final Trading Day	12:00pm	On market trading ceases
	12:00pm	Clearing Participants may commence transfer of Certificates or Units to ASX registry account to cover short positions
	12:00pm – 5:00pm	Special blocks (1 lot minimum) are available to close out open positions
	5:30pm	Clearing Participants to notify ASX of delivery intentions
Final Trading Day + 2	4:30pm	Clearing Participants with short positions must ensure eligible Certificates or Units have been transferred to the nominated ASX account within the relevant registry
	5:00pm	ASX Clearing Operations runs final reconciliation
	5:30pm	ASX Clearing Operations sends invoice to Clearing Participants
Final Trading Day + 3	10:30am	Buyer payments to be made by 10:30am (via Swift)
	12:30pm	ASX to transfer payment to sellers
	From 2:30pm	ASX to commence transfer of Certificates or Units to buyers

[1] Or 1,000 MWh of renewable energy generation for LGC’s
[2] Only certificates created in the assessment year or earlier are accepted as per the Vintage Rule

What do I need to do by when?

Participants are encouraged to review the draft contract specifications and delivery process outlined above and test access to the new product(s) (where applicable).

Market Participants wanting to trade ASX Environmental Futures should be in contact with their Clearing Participant to ensure they are aware of the listing and intend to clear the new product(s) from go live. All Participants wanting to go to delivery should ensure they have a registry account set up prior to the first delivery in 2025.

Need more information?

Issued by

Monique Bell, Manager, Commodities

Contact information

Commodities@asx.com.au

(02) 9338 0000

ASX Energy

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