S&P Global to amend CME CBL carbon contract settlement methodology

S&P Global Commodity Insights will amend its Platts CME CBL GEO, NGEO and CGEO contract settlement methodology from May 25, 2022, following the expiration of the May front-month contract.

This methodology change will take effect when the June contract becomes the front-month contract.

This decision follows a proposal made April 4, 2022, available here: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/040422-platts-proposes-amendment-to-cme-cbl-carbon-contract-settlement-methodology.

Under this new methodology, in the event that trading volume on a specific contract exceeds 100 contract units, the new methodology will reflect a volume-weighted average of transactions taking place on the NYMEX exchange over the final 10 minutes before the 2:30 pm Eastern time settlement. Each contract unit is representative of 1,000 environmental offsets. This new methodology would only apply if 100 contract units or more are traded within the last 10 minutes of the close on an individual contract. Blocked-in trades will not contribute to meeting this volume threshold or be included in the volume-weighted average.

If the traded contract volume threshold is not met, S&P Global will continue to base the settlement price using the most competitive bids and offers as shown through the NYMEX exchange at the 2:30 ET settlement time as highlighted here: /content/dam/spglobal/ci/en/documents/platts/en/our-methodology/methodology-specifications/Method_Carbon_Credits.pdf.

S&P Global will only use the volume-weighted average methodology for non-settlement days. On settlement days, the most competitive bids and offers shown through the exchange would continue to take priority. S&P Global will continue to monitor activity to determine what additional changes may be needed as liquidity and open interest on the contracts continue to increase.

Please send any further comments, feedback and questions to Platts_Carbon@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by S&P Global for public viewing. S&P Global will consider all comments received and will make comments not marked as confidential available upon request.