The Commodity Futures Trading Commission has issued a notice of its intent to determine whether the Carbon Financial Instrument contracts (CFIs) listed on the Chicago Climate Exchange (CCX) perform a “significant price discovery function.” CCX is a voluntary carbon reduction and trading program, and its CFIs are cash contracts that require the delivery of CCX carbon dioxide-equivalent emission allowances. Although exempt commercial markets, such as CCX, and the contracts traded thereon are generally subject to minimal CFTC regulation, a determination that CFIs perform a significant price discovery function would subject CCX to many of the obligations that apply to designated contract markets, such as large trader reporting, publication of daily trading information, and the establishment of position limits or position accountability levels for CFIs.

The comment period for the CFTC notice closes on September 4. The notice is available here.