The U.S. Commodity Futures Trading Commission (CFTC) plans to impose position limits and reporting requirements on the Chicago Climate Exchange’s voluntary carbon credit trading program for farms, factories, and power plants, Bloomberg reports. The commission proposed such oversight earlier this month.
The CFTC decision to regulate the carbon credit trading program establishes the commission’s role as a regulator of carbon credits and not just futures contracts, Kari Larsen, a partner at the law firm McDermott, Will & Emery LLP, said in the article.
The move by the CFTC comes as Congress is debating a cap-and-trade program similar to those already in existence in Europe and in the U.S. Northeast that would allow the federal government to create pollution credits to be bought and sold. Congress is currently debating how such trading will be regulated and what agency would oversee and enforce the rules.
The CFTC will continue to seek public comment on its regulation of carbon financial instruments on the Chicago Climate Exchange until Sept. 4.