The launch of the Emission Trading Scheme early next year has rightly elicited much excitement. Companies that fall under the new regime will be assigned a share of the 2.3 billion allowances to be issued, each of which represents the right to emit a tonne of carbon.

These companies are keen to know how many credits they will be assigned and their market value. Banks and brokers hope to profit from a market in which such price discovery can take place; speculators hope that the market will prove liquid enough for their purposes; repo market practitioners want to get involved in financing and short-covering activity; and environmentalists are anxious for a reduction in greenhouse gas emissions.