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EU drafts tough regulations for carbon market

| Sourced From Commodityonline |

BRUSSELS (Commodity Online) : In its attempt to clamp down on insider dealing, fraud and manipulation within the EUs Emissions Trading Scheme, the European Commission is preparing tighter regulation for the European carbon market.

In a statement issued here, EU Climate Action Commissioner Connie Hedegaard said the market has reached a size which makes it a potential target of fraudulent practices.

Earlier this month, the EUs law enforcement agency Europol estimated that around five billion euros of ETS monies had been lost to criminals in the previous 18 months.

They estimated that in some countries, up to 90% of the markets volume had been a sham.

As the market matures and grows further, it is critical that it continues to be subject to appropriate and effective regulatory oversight,” EU Climate Action Commissioner added.

The EU executive singled out the behavior of spot markets as a particular area of concern.

Spot trading is the practice of selling currencies, units or contracts for immediate or near-immediate delivery. Although it may have represented as much as 20-25% of the entire 2009 trading volume in the European carbon market, it has not been regulated by the EU.

Another Commission proposal suggested classifying all of the ETSs exotic-sounding mechanisms

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