History of global carbon trading policies

Average emissions reduction of 18% compared to 1990 levels ・ Mechanisms designed for emissions reduction: ・ Joint Implementation (JI): Cooperation on emissions reduction between Parties (developed countries). Countries with high abatement costs can invest in emissions-reduction projects in low-cost countries and earn Emission Reduction Units (ERUs), while host countries gain access to emissions-reduction technologies or corresponding investments. ・ Clean Development Mechanism (CDM): Cooperation on emissions reduction between Annex I Parties (developed countries) and non-Annex I Parties (developing countries), whereby developed countries acquire Certified Emission Reductions (CERs) through foreign investment in emissions-reduction projects. ・ International Emissions Trading (I-ET): A trading mechanism among Annex I Parties (developed countries), allowing countries whose actual emissions reductions exceed their compliance obligations to sell surplus units, while countries falling short of their targets may purchase such units internationally to meet compliance requirements. ・ 2007: Copenhagen Climate Change Conference—aimed at replacing the expiring Kyoto Protocol. ・ 2015: The Paris Agreement ・ Significance: The first globally inclusive climate agreement covering nearly 200 countries and regions; the second legally binding international climate accord. ・ Long-term goals: Limit global temperature rise to well below 2°C above pre-industrial levels, pursue efforts to limit the increase to 1.5°C, and achieve net-zero global emissions in the second half of this century. ・ Policy Instruments ・ Voluntary Carbon Markets: Certify and issue carbon credits (using approved methodologies) to entities not subject to mandatory legal emissions-reduction obligations; these credits may be used for corporate carbon offsetting or traded. ・ International: Clean Development Mechanism (CDM) [Carbon Offset Credits: CERs] ・ Domestic schemes: China Certified Emission Reductions (CCERs); American Carbon Registry (ACR) [Carbon Offset Credits: ACRs] ・ Third-party independent standards: Verified Carbon Standard (VCS) (USA) [most widely used globally] [Carbon Offset Credits: VCUs]; Gold Standard (GS) (UK) [Carbon Offset Credits: VERs]

Developments in the international derivatives industry and regulatory bodies during the first half of 2023

Scott O'Malia, CEO of the International Swaps and Derivatives Association (ISDA), stated on February 21 that ISDA’s Common Domain Model (CDM) platform could help reform collateral processes—processes proven flawed during recent market stress events. For instance, the pandemic-induced cash squeeze in March 2020 and the UK gilt bond sell-off in September 2022 both underscored the critical importance of collateral and margin management. He noted that ISDA’s application of the CDM extends beyond regulatory reporting to include collateral management. Recent market shocks highlight the urgent need to enhance efficiency and automation in this area, enabling firms to manage surges in margin calls amid market volatility. FIA Opposes EU’s Proposed Clearing Plan The Futures Industry Association (FIA) reiterated its opposition to proposals under EMIR 3.0—the revised European Market Infrastructure Regulation—that would mandate clearing accounts and thresholds for euro-denominated instruments to bolster European clearing capacity. FIA contends that mandatory EU-initiated clearing accounts would undermine risk management, impair operational efficiency, and weaken EU competitiveness. FIA also opposes incorporating quantitative thresholds as part of active account requirements. Should such thresholds be introduced, it stresses that any chosen clearing threshold level and phased implementation timeline must avoid placing EU firms at a competitive disadvantage relative to their international peers. FIA to Release Report on ION Cyberattack in Q2 Walt Lukken, CEO of the Futures Industry Association (FIA), announced at the U.S. Commodity Futures Trading Commission’s (CFTC) Market Risk Advisory Committee meeting on March 8 that FIA will publish a report on the January ION cyberattack by the end of June. He also announced the formation of a Global Cyber Risk Task Force to examine cybersecurity practices across the derivatives industry. The task force will focus on several areas, including existing cyber protections and protocols, the effectiveness of the industry’s initial response, and safeguards related to third-party service providers. Lukken further emphasized that business continuity testing is vital for helping derivatives firms prepare for unplanned market disruptions. Since 2004, FIA has hosted an annual disaster recovery exercise involving global exchanges, regulators, clearinghouses, clearing firms, service providers, brokers, and software vendors. FIA is currently reviewing this annual exercise to determine whether modifications are needed. Banks, Brokers Support Regulatory Scrutiny of Market Data Fees A quarterly Sell-Side Execution Management Insights report by financial consultancy Acuiti shows that banks and brokers support recent regulatory actions aimed at addressing excessively high market data fees. The report indicates that virtually all respondents consider market data fees too high; bank and brokerage executives find it difficult to forecast market data costs, and such costs have become one reason deterring them from entering new markets. Approximately 58% of respondents support increased regulation of market data providers and endorse caps on markups applied to data fees. The report also highlights algorithmic development and artificial intelligence adoption as two key areas of focus for sell-side firms, which are seeking more cost-effective ways to enhance automation—without incurring substantial additional infrastructure investment or assuming greater risk.

CFTC Probes Voluntary Carbon Credits as Market Scrutiny Grows

Sep 15, 2026

The US Commodity Futures Trading Commission is investigating the voluntary carbon credit market, targeting orphan oil well projects and deforestation credits amid quality concerns.

bloomberg

2026-09-15

CFTC Probes Voluntary Carbon Credits as Market Scrutiny Grows

CFTC Probes Voluntary Carbon Credits as Market Scrutiny Grows

FAQ