CME Group announces first trade of ethanol RINs futures

By Erin Voegele | May 20, 2013

CME Group, the world's leading and most diverse derivatives marketplace, has announced the first ethanol renewable identification number (RINs) futures contract was cleared over CME ClearPort. This trade was brokered by StarFuels Inc.

"As the most actively traded market for North American gasoline, ultra-low-sulfur diesel and ethanol futures contracts, our new RINs products make a good complement to our existing suite of services," said Gary Morsches, managing director Global Energy at CME Group. "We're pleased to see this first trade in Ethanol RINs, and look forward to working with customers and other market participants to offer innovative new products that help manage risk in the energy markets."

James Damask, manager at StarFuels, added, "Our clients are very excited about the new suite of RINs futures. With these contracts, they will be able to hedge their price risk exposure, achieve increased liquidity, and eliminate credit risk."

This launch comes at a time when CME Group's suite of Ethanol futures and options contracts are trading at record levels. The Ethanol complex has averaged between 5,000-6,000 contracts a day in 2013, which is up over 25 percent since 2012.

RINs futures provide a useful hedge for the price risk associated with the U.S. EPA’s renewable fuel standard (RFS2). The EPA has created a credit trading system for compliance with RFS2 for various types of renewable fuels based on units called RINs.

These contracts are listed by and subject to the rules of NYMEX.