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Growing emissions market tackles counterparty risk

New York, 2nd February - GFI Group Inc. (GFIG on NASDAQ), has brokered the first OTC trade to go through the LCH.Clearnet OTC emissions clearing service. The trade related to the European Union Emissions Trading Scheme.

Ron Levi, GFI's managing director, Europe, said, "This first cleared trade represents a significant step forward for the new, important and growing market in emissions trading. The participation of LCH.Clearnet, for the first time providing direct clearing for OTC emissions trades, removes counterparty risk and demonstrates that this market is now supported by the necessary infrastructure to help it to grow"

Robert Sprij, CO2 trader at Eneco - a Dutch energy company and one of the trade's counterparties - said "Eneco is pleased to have been involved in the first LCH.Clearnet cleared trade. We can now trade anonymously with the same delivery dates as in the OTC market and without having to set up credit lines with multiple counterparties".

Richard Heyman, Director - Exchange & Commodity Derivatives at LCH.Clearnet said, " We are delighted that our new OTC European emissions clearing service has been taken up on the first day. It is very much part of our role, as Europe's leading independent central counterparty, to help markets develop, and to bring the benefits of central counterparty services to as wide a range of market participants as possible. OTC energy markets are expanding all the time, and we look forward to providing a key service to this increasingly important industry sector."

The London Energy Brokers' Association estimates that its members broke around 80% of all European emissions trades on an OTC basis.