Japan’s TSE starts market maker trial in carbon credit market

TOKYO (Reuters) – Japan’s Tokyo Stock Exchange (TSE) said on Monday it has launched a market maker mechanism on a trial basis in the newly-launched carbon credit market to boost liquidity.

The trial will run from Monday to Feb. 29, 2024, and the target classifications are J-Credit on energy-saving and on renewable energy (electricity).

Designated market makers are trading house Sumitomo Corp, Marubeni Corp and Mitsui & Co as well as Daiwa Securities and Mizuho Bank.

The TSE, a unit of Japan Exchange Group, started trading carbon credits last month as the world’s fifth-largest carbon dioxide (CO2) emitter put in place a key element of its strategy to tackle climate change.

The exchange said at the time it would introduce a market maker mechanism later this year to help ensure liquidity.

Under the scheme, designated companies have obligations to quote a certain volume of simultaneous buy and sell orders within a certain price range. The quoting time is 1300-1500 local time (0400-0600 GMT), the TSE said.

(Reporting by Yuka Obayashi, Editing by Louise Heavens)