Spot carbon exchange CBL Markets expects to see the majority of its trading volumes in standardised benchmarks such as the GEO by the end of the year or early next year, Head of XMarkets Henrik Hasselknippe said Tuesday.
Traditionally, most of the exchange’s liquidity has been in individual projects rather than standardised contracts, which give sellers the right to deliver a range of credit types to buyers as long as they meet the base criteria. But Hasselknippe thinks this is bound to change radically this year, with more market participants entering the space and looking to trade in standardised instruments rather than the individual projects that require a lot of due diligence.
The market share of CBL’s GEO, N-GEO and C-GEO benchmarks has already risen from 5% in early 2021 to 15% by the end of the year, and is likely to breach the 50% mark by the end of 2022 or early in 2023. CBL has seen a huge influx of new market participants and expects to welcome “hundreds” of new clients this year, he said.