Climate Impact X (CIX), a global marketplace, auctions house and exchange for trusted carbon credits, announced the launch of its new spot trading platform, CIX Exchange. Powered by Nasdaq’s Marketplace Services Platform, CIX Exchange enables two-way spot trading of standardized contracts and single-project listings.
CIX’s Director of CIX Exchange, Ellery Sutanto, sat down with Nasdaq to tell us more about how Climate Impact X is leveling up carbon market transparency with Nasdaq Technology.
You launched your new carbon spot exchange today. Can you tell us about the market?
Voluntary carbon markets (VCMs) are one of the primary tools available today that can mobilize additional private finance at the speed and scale necessary to mitigate climate change. Yet, these markets continue to face challenges that impede scaling potential, including a lack of trust in the product, pricing opacity, contracts with delivery risks and fragmented liquidity.
Scaling carbon markets is an ecosystem-wide challenge, and no single entity can solve for market-building alone. Markets continue to make strides on project integrity, and we expect to see similar progress on price transparency driven by carbon exchanges and price-reporting agencies. It is crucial for exchanges like ours to reduce uncertainties and lower barriers to entry in transacting carbon credits. Collectively, we can build the foundations of trust and establish the right kind of environment for efficient price discovery and trading.
There are some innovative features of CIX that differentiate the exchange from other carbon markets. Can you talk about this?
CIX spent the past year listening to market user needs, identifying gaps and detailing how we can best contribute meaningfully to market development by delivering solutions that are needed as priorities. At the core, we are helping companies make more informed decisions around their carbon assets and decarbonization pathway.
To help address industry calls for greater transparency and certainty, we introduced the first on-exchange, daily liquidity window in the VCM space with firm bids and offers posted on-screen. This dedicated 30-minute pricing session pools all-day liquidity from global carbon trading hubs to help generate sharper market prices and improve order depth for spot nature-based carbon credits. Underpinning CIX Exchange is the launch of our first standard benchmark contract, CIX Nature X, which aims to cater to demands for more market-driven price markers. With a narrower project eligibility, Nature X is designed to be representative of the world’s largest and most-established REDD+ (reducing emissions from deforestation and forest degradation) projects. This helps to mitigate distortive price signals that could occasionally occur in still nascent VCMs.
You implemented Nasdaq trading technology to underpin the new market. What has the technology enabled for your organization? How will your members benefit?
Nasdaq’s technology is built on rigorous regulatory, reliability and security standards proven in the financial industry, which in turn enables CIX to bring exchange-grade trading functionalities to VCMs.
Carbon credits have a range of attributes that can influence their price, such as the type of project or vintage. Buyers value these characteristics differently. This inconsistency creates challenges in matching an individual buyer with a corresponding supplier and can often be a time-consuming and inefficient process. Through Nasdaq’s robust trading matching technology, we can match buyers and sellers based on multiple parameters and unique requirements. This helps to ensure that buyers are procuring trusted credits that meet their needs while removing bottlenecks to supplier financing that further enable the growth and development of global carbon markets.
What is the next big milestone for your business that you are able to share? What are you most excited about as we approach the second half of the year?
Following the launches of CIX Marketplace and CIX Auctions in 2022, the unveiling of CIX Exchange marks the first day we are open for business across our three core venues. CIX is now uniquely able to cater to all major user requirements in the carbon markets ecosystem, from project developers and suppliers to corporate end-users, financial institutions, professional trading houses and other intermediaries. We recognize, however, that this is a fast-evolving market and are already working closely with Nasdaq to explore how we can further enhance the trading experience on our platform.
As we enter the second half of 2023, we’re excited to bring an extended breadth of services to the market. We will continue to build on these solutions as the market evolves to ultimately realize our vision of accelerating genuine environmental impact through carbon markets.