August 6, 2007

First publicly traded carbon futures contract expected by year-end

Montreal Exchange (MX) and the Chicago Climate Exchange (CCX) plan to launch a Montreal Climate Exchange (MCeX) carbon futures contract by the end of 2007. This will be the first publicly traded carbon futures contract in Canada, noted MCeX chair Luc Bertrand, who is also president and CEO of MX.

Subject to regulatory approval, The MCeX carbon futures contract will be launched during the fourth quarter of 2007. The launch target reflects a timetable of consultations involving the federal government, financial market regulators and market participants concerning design aspects of the Emissions Trading System, product standards and market rules.

"Our decision is based on a careful assessment of the federal government's air emissions policy and consultations with potential market participants, including large industrial emitters," Bertrand said. "We anticipate growth in demand for environmental derivatives. These products will enable industrial participants to manage their emissions risks at the lowest cost while also creating continuous incentives for technological innovation," he added.

"The MCeX team assessed the federal government's air emissions regulatory framework and concluded that it meets the minimum conditions for the creation of a futures market," Bertrand noted. "The proposed federal government

regulatory framework is currently under consultative review. We will work closely with the government to ensure continued progress in establishing the proper environment for the launch of trading. In particular, we are confident that Ottawa will provide industry with a higher degree of policy certainty regarding emissions reduction targets and the definition of a single standard for tradable credits.

"We are also working closely with Canadian market participants to understand and respond to their specific needs--they are the ones who will ultimately trade MCeX products," he added.

The new MCeX futures contract is expected to generate the price signal required by large greenhouse gas emitters to manage the risk associated with the so-called "price of a tonne of carbon."

The MX will facilitate trading in the MCeX contract using its market infrastructure. It will also settle and guarantee contracts through its clearing house, the Canadian Derivatives Clearing Corporation. This arrangement will reduce trading, settlement and counterparty risk for market participants.

MCeX is urging the government to move rapidly to establish a national registry to track the quality of carbon credits, and has indicated its interest in managing such a service.

More information is available from Jean Charles Robillard, 514/871-3551, E-mail jcrobillard@m-x.ca, Web site www.m-x.ca.

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