Ensuring the integrity of the European carbon market
The European carbon market is relatively young but growing rapidly. As it gets more sophisticated, it is important that the rules governing oversight of the market keep pace with its development and adequately address risks that may arise.
In principle, anyone can trade in the carbon market. The main categories of traders are energy companies and industrial companies that have obligations under the EU ETS, and financial intermediaries such as banks which also act on behalf of smaller companies and emitters.
Preventing market abuse and other market misconduct
To ensure a safe and efficient trading environment and to enhance confidence in the market, the European Commission has made a proposal to fully include emission allowances within the scope of revised rules governing financial markets. If the revision is approved, it would mean:
- High integrity standards would apply to all market participants, who would be prohibited from engaging in manipulation through practices such as spreading false information or rumours;
- Companies with large installations regulated by the EU ETS could not profit from inside information at the detriment of other market participants;
- Better transparency and simpler access to information (e.g. how much is traded and at what price on carbon exchanges) would be available to all market participants;
- Anti-money laundering safeguards (e.g. know-your-customer checks) would be extended to all segments of the carbon market.
Proposals based on stakeholder consultations
The Commission's proposals are based on an intensive and informative dialogue with stakeholders, including a stakeholder meeting on carbon market oversight held in May 2011.