Analysts say Green Exchange approval not to affect CME Group profits

The Commodities Futures Trading Commissions approved the Green Exchange last week. The approval prepares Chicago-based CME Group Inc., the world's largest futures and options exchange, for potential growth if the U.S. passes a cap-and-trade or emissions legislation, but for now, the approval is unlikely to affect CME Group's bottom line.

"I don't expect the approval to move the needle at CME Group Inc., at the moment,"said Michael Wong, an analyst with Morningstar in a recent interview with Xinhua.

The Green Exchange, however, does provide the CME Group with a lot of optionality.

"If some kind of cap-and-trade or emissions legislation does come up it means the CME Group already has its toes in the water," Wong says, "It will be able to participate in the growth of that industry right from the start.

For the CME Group it is a win-win situation because"the CME Group already has its own technological and exchange-trading infrastructure," Wong says, "so supporting the Green Exchange probably doesn't cost the CME Group much."

Earlier this month the U.S. Senate Democratic leaders shelved plans to cap greenhouse gas emissions as part of a broader energy bill. Although the timeline for passing an emissions legislation remains uncertain, the Green Exchange, along with many U.S. companies are betting it's only a matter of time.

"We do believe (an emissions'legislation) will come to fruition eventually in North America," wrote Henry Bakker, director of communications at Green Exchange via e-mail."When it does come up we want to be prepared to participate aggressively in any nationwide scheme that is up."

Currently the Green Exchange is focusing on the European carbon market, where there is a EU-wide mandatory trading scheme. The company is also look to move into the Asian region.

"We see China as being the regional player leading the carbon push and we are looking into ways of getting involved even in these early stages," wrote Bakker.

Source: Xinhua