(Bloomberg) NYSE Euronext, the biggest operator of U.S. stock exchanges, formed a joint venture with APX Inc. to expand its trading volume in electricity, renewable energy and carbon dioxide allowances.
The New York-based company will be majority owner of a new entity called NYSE Blue after contributing its 60 percent stake in BlueNext, NYSE said today in an e-mailed statement. Paris-based BlueNext, the largest exchange for spot trading of carbon dioxide allowances, is trying to win back share lost to rivals including Intercontinental Exchange Inc., which bought the London-based European Climate Exchange for 395 million pounds ($606 million) in July.
"There's no question they've had a very good competitor in ECX," Brian Storms, chairman of APX and chief executive officer for the new venture, said today in an interview. He declined to disclose financial terms of the venture.
APX, with offices in New York and San Jose and shareholders including Goldman Sachs Group Inc., will contribute its systems for trading and settling power and environmental contracts in the U.S. NYSE Blue will vie for contracts as states join CO2- trading programs and set their own climate laws in the absence of a national system, he said.
"I think that would be very advantageous to us over the short run, the next couple of years," Storms said.Down 30%
BlueNext's carbon-trading volume in the six months through June this year fell 30% to 194 million metric tons as the European Climate Exchange handled more spot trading in European Union carbon allowances and grew its business in futures. BlueNext was forced to halt spot trading for several days in March after some investors got stuck with second-hand emission credits that couldn't be used again in Europe.
Global carbon trading volumes jumped 80 percent to a record last year, according to World Bank figures published in May. Still, the value of transactions rose 6.4 percent to $143.7 billion as the recession depressed prices. The EU runs the world's largest cap-and-trade program for emissions allowances, followed by the United Nations offset system.
More than 190 envoys failed at last year's climate talks in Copenhagen to agree on a climate change treaty. In the U.S., the House approved a bill last year to set limits on CO2 linked to global warming and create a market in pollution allowances. The bill, supported by President Barack Obama, stalled in the Senate. Without new cap-and-trade legislation, Obama's Environmental Protection Agency plans to use existing laws to regulate some sources of carbon pollution.
Managing New RisksNYSE Euronext, formed with the 2007 takeover of Euronext, must be able to manage "new types of business risks," NYSE CEO Duncan Niederauer said in the statement. "Our listed companies and markets customers increasingly need innovative tools and trading instruments," he said.
The company handled 1.81 million commodities contracts in August, more than twice the amount a year earlier, the bourse said in an e-mailed statement earlier today. Daily volumes averaged 82,000 contracts, compared with 43,000 a year earlier. Total commodity volume in the first eight months of the year reached almost 10.44 million contracts, 33 percent more than a year earlier.
About 35 percent of APX's revenue this year is from the environmental markets, with the rest coming mainly from power, Storms said. The company's role providing the technology to the Gold Standard and Voluntary Carbon Standard registries gives it access to much of the global voluntary-carbon markets, he said.
"We touch a big chunk of the market outside the U.S. by virtue of those registries," Storms said. APX Inc. is unrelated to APX BV in Amsterdam.
APX helps create and trade renewable-energy certificates in North America. The transaction is expected to close by the end of 2010, the statement said. Goldman Sachs advised APX, it said.
Groupe Caisse des Depots et Consignations, which owns the remaining 40% of BlueNext, will retain its holding, Storms said.
Nasdaq OMX Group Inc., NYSE's main rival in U.S. equity trading, completed its purchase of Nord Pool ASA, Europe's biggest power exchange, in May. Exchanges had 18% of the region's power trading in 2009, down from 29% a year earlier, according to London-based Prospex Research Ltd.