Rabobank and Fortis Bank are planning to market structured emissions trades to corporates operating under the E.U. emissions allowances scheme, which launched at the start of the month. The low countries houses will also run spot and forward trading in emissions allowances alongside their structured offering and officials say increasing the liquidity of these underlying allowances will be crucial to any structuring business.
Claire Byers, manager in environmental products at Fortis Bank in Amsterdam, said the bank is working with the commodities desk on cross-asset class products, but it has not yet come to the market with any structured emissions instruments. "These are things that are very much in the pipeline," she added. Louis Redshaw, head of environmental markets at Barclays Capital in London, said bespoke trades that combine emissions with other commodity products could be interesting, particularly for small emissions producers. "I am not so bullish on standard structured products," said Redshaw, who explained large coal consumers have trading desks, which can combine commodities such as coal, gas and power with emissions themselves.
In contrast with the cross-asset approach of Fortis, John Marlow, head of environmental financial products at Rabobank in London, said it is designing tax-based structured trades. Rabobank will market these trades to power companies and other corporates, including steel manufacturers, which are affected by the emissions scheme, he added.
