The Commodity Futures Trading Commission (CFTC) has introduced proposed guidance regarding the trading of derivative contracts for voluntary carbon credits (VCCs). It establishes factors for designated contract markets (DCMs) to address specific provisions of the Commodity Exchange Act (CEA) and CFTC regulations.  Proposal CFTC  seeks input on a variety of VCC-related issues through 17 specific questions as part of the Biden administration’s focus on climate issues. Comments on the proposal are open until February 16, 2024.

What are the proposed CFTC guidelines all about?

CFTC Chairman Rostin Behnam emphasized the importance of the proposal:

“Today’s CFTC action is the culmination of a two-year investigation into carbon markets and many more years of in-depth work on the impacts of climate on financial markets.” 

He further stated that the agency’s goal is to help improve integrity leading to transparency, liquidity, and price discovery. All of these are hallmarks of the CFTC in regulating markets and setting standards. ( (Jennifer L, carboncredits.com)