The Dutch pension asset manager's Asia Pacific head of real estate says his team has just had one of its busiest years ever and that 2021 is looking similarly promising.
The service facilitates the exchange of carbon credits among investors and other participants in the carbon trading market and provides a custody and safekeeping service. It will cover carbon credit instruments issued under both the European Union Emissions Trading Scheme and the Clean Development Mechanism set up under the Kyoto Protocol.
Deutsche Bank says the offering reduces the settlement risk associated with current carbon trading practices by settling carbon credits simultaneously against cash, relieves investors and traders of operational responsibility for the settlement process, and facilitates rapid settlement by providing a single platform for holdings across multiple currencies and markets.
The bank says the service also manages the limit on credits that can be transferred from a country other than the clientÆs host country under the European Union Emissions Trading Scheme by tracking a clientÆs carbon credit holdings and allocating them to the different national carbon registries. The combination of custody, settlement, and clearing provides a streamlined process similar to that of more traditional asset classes, the bank adds.
Deutsche Bank will leverage the infrastructure of its depositary and clearing centre in London for the carbon product. The centre currently provides a range of custody, clearing and settlement services for London money market instruments and provides safekeeping services for EuropeÆs International Central Securities Depository, the largest depository in the US, and the London Metal Exchange.
ôWe believe the provision of a single professionally managed platform will significantly increase activity in this market and provide additional capacity for the expected growth in the trading and banking of carbon credit instruments,ö says Dinkar Jetley, global head of trust and securities services and cash management financial institutions at Deutsche Bank.
The global carbon trading market was created as a result of the passage of the Kyoto Protocol, which has an aim of reducing greenhouse gases worldwide by setting emission reduction targets for the countries that ratified the protocol. The European Union has its own regional Emissions Trading Scheme consistent with the principles of the protocol for the reduction of carbon dioxide.
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