Reuters has a report on the thus far unsuccessful launch of futures trading for Renewable Energy Certificates (RECS) on the ASX - Australia renewable energy futures stall on take-off.

Australian securities exchange operator ASX Ltd's plans to take a lead in the renewable energy market stalled on Tuesday when a new futures contract failed to trade after listing for the first time.

The futures contract and a related options contract over renewable energy certificates (RECs) were launched to reduce price risks faced by electricity suppliers as Australia looks to cut its reliance on electricity from coal-fired power stations.

Traders said the debate over Australia's proposed emission trading scheme (ETS) had taken some of the interest out the contract. The government reached an agreement with the opposition on Tuesday over proposals that may allow the scheme to passed into law.

"It will take people a little bit of time to digest just what is going on in these markets and with the ETS where all the focus is at the moment," said Gary Cox, head of energy trading at Newedge Australia.

The ASX decided to launch the REC futures contract after the government passed legislation in August mandating that 20 percent of Australia's energy should be from renewable sources such as wind farms by 2020, more than four times the current level.

RECs are a form of currency that can be earned by installing solar panels, wind turbines and micro-hydro plants. Each REC represents one megawatt hour (MWh) of electricity generated from renewable energy and can be traded once registered.

Cox said there was also uncertainty after the government decided to hold an inquiry into the market being flooded with RECs generated from home-based solar panel installations that received government grants.

REC prices have dropped from a spot price in the over-the-counter market in June of A$50 to around A$31.10 at present amid the excess supply.

The SMH has a report on a new coal futures contract being introduced - Futures contract to bridge Australia-Asia divide on coal

THE contentious annual benchmark pricing negotiations between Australian miners and Asian steelmakers could soon be a relic of the past if the parties take the lead from the thermal coal market. GlobalCOAL, which has been facilitating over-the-counter trading in the thermal coal market since the start of the decade, is introducing a futures contract based on coal from Newcastle in late September or early October.

Although market participants - including coalminers, commodities traders and utilities - already take part in over-the-counter swaps through globalCOAL, the addition of a futures contract will reduce credit risk exposure and increase liquidity. Increased liquidity could lead to more accurate pricing based on market demand, which is important in a time of highly volatile commodity prices.

"It is a natural step in the evolution of the coal market," said the globalCOAL chief executive, Eoghan Cunningham, citing demand from investment banks, hedge funds and other institutional investors to gain access to coal price performance. "Rather than benchmark pricing, you are going to have more index linking."

The futures product will be traded on leading energy futures and options exchange, ICE Futures Europe. Earlier this year, the Australian Securities Exchange announced plans for a rival futures product, but it has not yet revealed a start date.

While this is speculation, I don’t see it as the same type of situation that we’re seeing in the “regulated,” black boxed commodity markets right now.

If I understand what’s happening in the case below with the iron ore, the speculator doesn’t seem to have any way of manipulating the market that I can see. It’s a bet on the spot price in the future without any delivery of goods required, BUT, and this is the difference, after the speculator enters the trade, he or she MUST face the music at the end of the month, good or bad. Either the iron ore producer wins, or the cash speculator wins AT THE END. There’s no way out during the interim period.

This looks like a relatively fair and square gun battle to me, because the participants, who enter into the deals, are forced to face the consequences, good or bad, in the future.

Unless I’ve really misunderstood something here, this actually looks cleaner than the so called regulated commodity markets. Please correct me if I’m wrong. This is the first time I’ve heard of this type of trade, so I’m sure that there’s a lot that I don’t even know that I don’t know.

Far more disturbing than the cash-settled swaps described below are the hedge funds vertically integrating themselves throughout food production infrastructures. This will give elites unprecedented power to collude in order to create artificial scarcity.