In certain ETS systems, a proportion of these allowances may be freely allocated by the authorities to the covered companies to ease their energy transition. However, it is also common that the entities have to buy the full obligation for each compliance period. Through this market-based mechanism, ETS systems create an economic incentive for companies to reduce emissions.
Through its subsidiaries Vertis Environmental Finance (“Vertis”) in Europe and STX LLC in North America, STX Group has a track record of over 25 years trading in emission allowances. Vertis operates as an independent regulated entity, authorized to trade EU emission allowances (EUAs), which are designated as financial instruments under the MiFID II regulatory framework in Europe. STX North America is an active authorized entity trading California and Quebec Cap and Trade instruments (CCAs & CCOs), Washington Carbon Allowances (WCAs), and Regional Greenhouse Gas Initiative Allowances (RGGI). In addition to being active in ETS Markets, STX also operates in the Voluntary Carbon Markets.
In 2022, ETS markets reached a record €850B ($909B), with the largest by far being the European Union (EU) ETS at €751B. However, their popularity continues to grow as a powerful policy instrument with established markets in several countries and states, including the United States, China, South Korea, Australia, and New Zealand.
STX’s role in global ETS Markets
STX is an active principal trading firm engaged in global ETS markets with direct access to major exchanges, including ICE, EEX and NODAL. Boasting sophisticated trading capabilities and extensive access to market participants, we can offer transactional liquidity to assist regulated entities in meeting their obligations.
- Buy or sell emission allowances with SPOT, Forward, Option and SWAP contracts,
- Provide relevant market insights on trends in trading activity,
- Develop unique compliance plan to hedge price risk and identify abatements costs.
- Provide regulatory and compliance guidance to market participants.
Why choose STX?
Experience and track record
- Over the past 25 years’ trading experience, STX Group and its subsidiaries have established itself as an expert in the ETS markets globally.
Advanced trading systems & risk controls
- As a leading environmental commodity trader, we boast a sophisticated trading infrastructure, robust risk management processes, and the capability to create unique trading structures for hedging price risks.
- We have direct access to major exchanges, including ICE and NODAL.
- We can serve as a liquidity provider by buying and selling emission allowances through spot, forward, option, and swap contracts.
Holistic perspective with deep ETS market insights
- With active involvement in over 50 environmental commodities, ranging from physical biofuels and renewable natural gas to renewable energy and carbon, STX boasts a unique perspective on the increasingly interconnected markets. This broad engagement enables us to foresee how these markets are likely to affect one other.
- We possess extensive trading experience in all major ETS markets.
International footprint with local support
- With over 500 employees from 70 different nationalities working in 12 offices, STX is a global player with local market knowledge and proximity to key ETS markets.