Carbon products

Virtuse provides expertise advisory across the energy markets, with professional brokerage and consulting services. To achieve the desired risk profile in the carbon market, whether it is for trading or hedging purposes, clients can utilize different instruments best suited for their needs.

Spot transactions

Buying or selling carbon credits with spot (immediate) delivery has the advantage that counterparty risk is minimized. When buying carbon credits on a spot basis, clients can be assured that the allowances will be in their account for compliance. When selling carbon permits, it is the quickest way to monetize your carbon assets. Virtuse brokerage department trades actively in spot in all major emissions markets and will be able to provide quotes and advise anytime.

To avoid trading issues in EU ETS spot trading, the European Commission created an electronic system (ECAS), European Emissions Unique Registry, in which delivered certificates may remain on “stand -by” up to 26 hours, until confirmation of their payment. Virtuse recommends this type of transaction for the safety of your sales of CO2 certificates.

For purchases of EUAs, CERs or ERUs, Virtuse specialists will be happy to assist you in order to find the lowest price on the market.

In China ETS we trade all the major carbon products, including: SZA 2013–17, GDEA, CQEA, FUEA, SHEA, BEA, HBEA, TJEA and CCER. Through our professional network of partners, compliance clients, international companies, exchanges and investors our team will give you the best price for your compliance needs.

Forward transactions

Forward buying and selling of carbon permits means trading these certificates at a present time with payment and delivery at a future date, set at the time of the transaction. The forward contract price is set in the present and payment will be made at a later date, also set in the present. The advantage of this transaction is the price accuracy. Transacting on a forward basis can also reduce the cost of financing. Trading at future dates, however, exposes clients to counterparty credit and market risks.

Futures, swaps, options

The carbon market has progressed since its modest beginnings, when carbon trading was about a simple trade between two parties: one needing a permit or offset credit for compliance, and the other having one to spare. Carbon is now being marketed as a new asset class for investors. Trading for speculation rather than compliance changed the dynamic of the carbon market. In some markets Carbon finance has reached the point of maturity, and the nature of the trading has changed significantly. Our team trades all array of derivative products such as, futures, swaps, structured products, options and synthetic options. 

Futures transactions are concluded through specialized carbon exchanges. The price is set in the present and allowances delivery and payment will be made at a later date, also set in the present.

For settlement transactions (both immediate and forward) allowances are usually being exchanged for cash. This is the simplest form of allowance transfer and the most common in emissions markets. Trading futures allows you to mitigate the impact of adverse price movements or to profit from changing demand and supply fundamentals affecting the market. It allows clients to mitigate or increase the price risk associated with carbon prices.

Swaps have also become a popular type of transaction. In carbon markets, swaps, for example, allow one party to exchange allowances of one vintage year for allowances of another vintage year from a second party.

Options represent a small but growing percentage of carbon market activity. The hedging, profit-taking, raising cash and arbitrage strategies are considered as the main drivers of growth in options markets. Continuing global financial uncertainty and reduced access to cheap lending are cited as additional factors for the continued growth of options trading in ETS permits; options can provide a source of financing when other alternative financing is not available or more expensive.

In a nutshell, Virtuse team is committed in meeting the emissions trading demands of small to middle size companies, by offering innovative solutions, delivers superior hedging strategy, execution and custody of wide spectrum of carbon credits.