ACX established its regional base in ADGM in August 2021 with the support of Hub71. Image Credit: Supplied

Dubai: ACX (AirCarbon Exchange) on Wednesday declared the launch of ACX Abu Dhabi, its exchange and clearing house in Abu Dhabi Global Market (ADGM). The platform has already conducted significant trades, marking the initiation of the voluntary carbon markets (VCM) within this market.

ACX established its regional presence in ADGM in August 2021, with support from Hub71, Abu Dhabi’s global tech ecosystem. In September 2022, Mubadala made a strategic investment in ACX as part of its economic diversification objectives and commitment to responsible investing.

ADGM, an international financial center in the capital of the UAE, established itself as a financial free zone. In September 2022, it became the first jurisdiction to regulate voluntary carbon credits as financial instruments. This was achieved through the introduction of an Environmental Instrument classification, creating a regulatory framework for licensing exchanges and clearing houses for both spot and derivatives markets related to these products.

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“This marks another important step in bringing carbon credits closer to the world of regulated commodities,” said ACX’s Co-Founder and Co-CEO William Pazos. “ACX is proud to be the world’s first fully regulated spot carbon environmental exchange and clearing house.”

ACX Abu Dhabi became the inaugural entity to receive a license under this framework in November 2022. It became the world’s first regulated Recognised Investment Exchange and Recognised Clearing House, offering Environmental Instruments in the form of carbon credits. These regulatory licenses enhance trust, security, and investor protection by enforcing fair and orderly trading, real-time market surveillance, and ensuring market integrity, transparency, and efficient price discovery. ACX strictly complies with client asset segregation, regulatory capital, and audit requirements.

As we find ourselves in a critical time with the development of global carbon markets, this step marks a momentous milestone in the journey towards a thriving market for voluntary carbon markets

- Arvind Ramamurthy, Chief of Market Development at ADGM

With secured investments and approved regulatory licenses, ACX created the foundation for VCM participants to trade carbon credits and environmental instruments under a capital markets regulatory framework. The first trade of carbon credits on this fully regulated exchange occurred between First Abu Dhabi Bank (FAB) and Helix Climate.

“As the UAE’s largest bank, we are keen to support the expansion and potential of carbon markets to provide price signals that can help companies reduce or remove their greenhouse gas emissions in the most efficient way,” said Sameh Al Qubaisi, Group Head of Global Markets at FAB.

Additionally, ACX Abu Dhabi introduces the first trade on its Carbon Market Board (CMB), an electronic trading facility facilitating over-the-counter transactions. This trade was completed with South Pole, a leading climate project developer and solutions provider.