Dealers agree standards for emissions options

GFI-hosted roundtable recommends November expiry date and 25k ton deal size

New York - 10th January 2006 - A main expiry date in November and standard deal sizes of 25,000 tons were two of the main recommendations to come out of an emissions options trading roundtable hosted in London last month by GFI Group Inc. ('GFIG' on NASDAQ).

Roundtable participants agreed that physical options would expire on the second Thursday of November with delivery on December 1st. Financial options would also expire on December 1st thus minimizing the basis risk between financial options and the underlying forward - which already delivers on December 1st.

There was also support for an expiry date in March, to help compliance trading, but more discussion on this would be needed.

The roundtable also decided that options would be European style; partial expiry would not be permitted; and exercise would be predominantly by telephone with fax backup; and in-the-money physical options would not be exercised automatically.

The roundtable discussed a legal framework and the intention is to create a draft document with the International Securities and Derivatives Association, the European Federation of Energy Traders and the International Emissions Trading Association.

Ron Levi, GFI's European managing director said, "Standardisation of contracts means more liquidity and is an important element in helping markets to grow - and emissions is no different. We were pleased to be able to host this event; we were pleasantly surprised by the level of interest it generated; and we trust its decisions will be adopted to help the growth of emissions options trading."

The roundtable attracted over 50 attendees from brokers, investment banks, energy companies and hedge funds and other market participants.

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