The Tokyo Stock Exchange has launched a market maker scheme for public consultation to boost the liquidity of its carbon credit market and plans to allow energy saving and renewable electricity J-Credits, according to a statement April 26.
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Register NowThe move follows a trial conducted under a carbon credit trading simulation conducted by the Ministry of Economy, Trade and Industry, and the exchange plans to start accepting applications from entities to become market makers in mid-May 2024. The period of consultation is from April 26 to May 10, 2024.
The TSE said that since it launched carbon trading on Oct. 11, 2023, as an official market of JPX Group, it has been implementing various measures to expand the market and improve liquidity.
Market making refers to the continuous quoting of bids and offers by a market maker and should result in fair price formation of carbon credits through market transactions and smooth circulation of carbon credits on the TSE market, according to the consultation document.
The period of designation as a market maker will be from April 1 to the following March 31, and for fiscal year 2024 the period will begin on the scheme's implementation date, and will last until March 21, 2025, it said.
The applicant should be a carbon credit market participant, have experience trading J-Credits and executing trades in eligible trading categories, and be qualified to trade financial instruments on exchange markets operated by the TSE or the Osaka Exchange, or the commodity market operated by the Tokyo Commodity Exchange.
A market maker may submit quotes for energy saving and renewable energy J-Credits on every business day from 1:00 pm to 3:00 pm Japan Standard Time, and the maximum spread for bids and offers is Yen 200. The minimum quantity for bid and offers for energy saving credits is 500 mt and for renewable energy (electricity) credits is 1,000 mt.