Greenhouse Gas Emissions Permits to Be Traded via Securities Accounts Like Stocks

(Seoul=Yonhap Infomax) Su Jin Yoo – South Korea will allow greenhouse gas emissions permits to be traded through securities firm accounts, similar to stock transactions, following the completion of a new brokerage trading system.

The move is expected to invigorate the emissions trading market by enabling participation from financial institutions such as banks, insurers, and pension funds. It also lays the groundwork for the launch of related futures and financial products, enhancing trading convenience.

The Ministry of Climate, Energy and Environment announced on the 23rd that, starting from the 24th, greenhouse gas emissions permits can be bought and sold through securities firms.

Previously, emissions permits could only be traded directly via the Korea Exchange (KRX). With the new system, market participants can now open accounts at securities firms and conduct brokerage transactions through their trading platforms.

Discussions on brokerage trading for emissions permits began in earnest in September 2023. The ministry promoted the introduction of brokerage trading through its “Emissions Trading Market Activation Plan,” and the legal foundation was established with the January 2024 revision of the “Act on the Allocation and Trading of Greenhouse Gas Emissions Permits,” which created a new category for emissions trading brokerage business.

Under the revised law, market participants now include not only previously designated entities and market makers, but also securities firms, asset management companies, banks, insurers, and pension funds. These institutions can participate in brokerage trading via securities firms.

Following a public tender in March last year, NH Investment & Securities was selected as a pilot participant for the emissions trading brokerage business. The Greenhouse Gas Comprehensive Information Center, which manages the emissions registry system, developed the necessary systems to securely handle brokerage trading information, in collaboration with the Korea Exchange and NH Investment & Securities. Communication infrastructure between the Korea Exchange and NH Investment & Securities has also been completed.

Trading hours remain unchanged at 10:00–12:00 KST. The start time for emissions permit auctions and over-the-counter (OTC) trading will shift from 13:00 to 14:00 KST, with auctions closing at 15:00 and OTC trading at 17:00 KST.

“The implementation of brokerage trading for emissions permits will vitalize the market and contribute to the effective achievement of national greenhouse gas reduction targets,” said Oh Il-young, Director General for Climate and Energy Policy at the ministry. “We will continue to develop the emissions trading market and, after reviewing market conditions, will decide on allowing individual participation.”

sjyoo@yna.co.kr

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