Friday, April 26, 2013

CME Group to Launch Futures Based on Renewable Identification Numbers (RIN credits)

This sure looks like the kind of side bets the 1890's bucket shops used to offer which, if it weren't for that pesky supremacy clause in the Constitution, would be illegal under state anti-gambling and anti-bucketshop laws.
See also: Credit Default Swaps purchased by a party who doesn't own the underlying debt.

From the CME:
CME Group will launch nine futures contracts based on Renewable Identification Numbers (RINs), the credits traded by ethanol makers and fuel companies to comply with a federal biofuels mandate.

The contracts, which will begin trading May 13, will provide a useful hedge for price risk associated with the U.S. Environmental Protection Agency's renewable fuels standard, CME Group said in an April 25 statement.

 "With the recent increase in volatility in RINs prices, we've seen strong interest from our customers and other market participants for cost-effective ways to manage their risk in this market," Gary Morsches, CME Group's Managing Director, Global Energy, said in a statement.

"As the most actively traded marketplace for the benchmark RBOB Gasoline and ULSD Diesel contracts, our new RINs futures contracts will be a strong complement to our existing suite of products and will allow our customers to take advantage of reduced capital requirements and margin efficiencies,"...MORE