The China Emissions Exchange in Guangzhou on Monday loosened its price control regulations for big bilateral trades in a bid to incentivise trading houses to take bigger positions in the market.
Bilateral deals for 100,000 or more allowances can now be agreed at a price within 30% of the previous day’s closing price, according to new trading rules released by the exchange.
Previously, all trades of whatever size, both on the exchange and OTC, had to settle within 10% of the latest closing price.
The rule change is aimed at making it more attractive for investors to trade actively in the Guangdong ETS by increasing the potential for dealers to make substantial short-term profits.
Guangdong has seen an uptick in trading after emitters finalised their 2014 compliance in late June.
Since July 1, more than 3.4 million allowances have traded in China’s biggest pilot carbon market, more than half of the total volume in the bilateral market since the ETS launched in Nov. 2013.
By Stian Reklev – firstname.lastname@example.org