Eventus, one of the leading global providers of multi-asset class trade surveillance and market risk solutions, and AirCarbon Exchange (ACX),one of the global exchange revolutionizing the Voluntary Carbon Market (VCM), recently announced that ACX has selected Eventus as its partner to introduce the first comprehensive market surveillance program for the VCM, which was created to drive financing activities that reduce greenhouse gas emissions globally.
ACX will use the Eventus Validus platform for trade surveillance, transaction monitoring and anti-money laundering (AML) in its spot and forthcoming derivatives markets globally.
Due to the emerging nature of carbon credits as an asset class, markets for carbon credits currently operate without the controls of more conventional financial instruments such as commodity derivatives. ACX launched in 2019 with a vision of bringing efficiency and liquidity to these voluntary markets, as well as to increase transparency and trust to levels seen in more established markets.
Thomas McMahon, CEO and Co-Founder of ACX said “A key principle of ACX’s vision is our decision to partner with Eventus to develop, for the first time in the history of the VCM, a comprehensive market surveillance platform to monitor prohibited activities such as market manipulation or money laundering. With trade surveillance set to go live on ACX later this year, we expect that the enhanced integrity that this provides will further open up the Voluntary Carbon Market to as broad a range of participants as possible and hence increase the necessary investment in global carbon reduction and offset programs.”
ACX undertook a “rigorous assessment process” for potential trade surveillance partners, not only considering whether the system could appropriately support ACX’s market, but also whether it would allow ACX to meet all of its regulatory requirements on an ongoing basis in the multiple jurisdictions in which it operates. As a soon-to-be fully regulated Investment Exchange by the Financial Services Regulatory Authority in the Abu Dhabi Global Market, ACX is required to operate an effective market surveillance and transaction monitoring program to identify, record, detect and prevent conduct amounting to market misconduct and/or “financial crime,” such as any attempt to breach international sanctions.
McMahon said “Given the nascent nature and constant pace of development of the VCM, ACX required a market surveillance partner that not only provides a robust service but is agile enough to be regularly enhanced and refined as these markets grow and evolve. We identified Eventus as the partner best able to allow us to meet these requirements, particularly given the experienced team and flexibility of the Validus platform, enabling us to easily customize it to our unique requirements. Validus is also able to support both our established spot market for voluntary carbon credits, alongside the related derivative contracts that ACX intends to launch next year.”
Eventus CEO Travis Schwab said “It’s truly exciting for us to play a role in ensuring the safety of these important markets, which can help attract liquidity as well as reinforce investor confidence. AirCarbon Exchange is leading the way – particularly in markets such as Singapore, the UAE and Africa – in establishing a robust carbon offset marketplace that can stand the test of time and grow, making a significant contribution to the future of our planet. Our deep experience in established markets, as well as more emerging exchange venues, enables us to offer ACX expertise, along with the full functionality and scalability of the Validus platform, as the exchange seeks to grow and promote further adoption of this valuable emissions-reducing tool.”