Deutsche Bank promises to streamline carbon trades

New custody, clearing and settlement service similar to those available on the money markets aims to remove risk and complexity from carbon trading processes

The growing maturity of the carbon market was underlined yesterday when Deutsche Bank launched a new service designed to streamline carbon trading processes and limit associated risks.

The company said the new custody, clearing and settlement service would manage the exchange of carbon credits from both the European emissions trading scheme (ETS) and UN clean development mechanism (CDM), and provide "an integrated custody and safekeeping service" for participants in the market.

Dinkar Jetley, global head of trust and securities services/cash management financial institutions at Deutsche Bank, said the service would provide energy and industrial firms, financial institutions and other carbon investors with a "risk-free" way of holding and trading carbon credits.

The bank said the service would allow companies to avoid many of the complexities associated with carbon trades by relieving traders of operational responsibility for the settlement process; providing a single platform covering multiple currencies and markets; and ensuring compliance with the ETS by managing the limit on the number of credits that can be bought from outside the client's host country.

Jetley said the new service would increase the attractiveness of carbon trading to investors, adding that the bank believed the provision of a single managed platform "will significantly increase activity in this market and provide additional capacity for the expected growth in the trading and banking of carbon credit instruments".

The bank said the new service would use the existing infrastructure at its Depositary and Clearing Centre in London, which provides similar trading services to money markets.