Carbon-Credit Derivatives Get More Scrutiny From US Regulator

A key US regulator is planning to put in place guardrails for the fast-growing market for voluntary carbon-credit derivatives.

Rostin Behnam, chairman of the US Commodity Futures Trading Commission

Photographer: Ting Shen/Bloomberg

The Commodity Futures Trading Commission on Monday floated fresh guidance for exchanges that want to list futures or other derivatives products based on carbon credits. Critics say the market lacks transparency and could be manipulated by fraudsters.

Carbon credits are increasingly popular with energy producers, financial services and transportation companies that have promised to reduce their environmental footprint. They allow purchasers to claim they offset their overall emissions by purchasing a certain amount of credits.

As interest in the offsets ...