This week the US Commodity Futures Trading Commission (CFTC) issued this guidance to help whistleblowers identify improper behaviour in US carbon markets and in voluntary markets in particular.
Beside its enforcement authority over designated contract markets (DCMs), the CFTC also has anti‐fraud and anti‐manipulation enforcement authority over the related spot markets for carbon credits. The guidance specifies the following behaviours whistleblowers should be on the lookout for:
As carbon markets continue to grow rapidly in the US, it seems clear that the CFTC has concerns over the ongoing integrity of these markets. Firms actively trading in US carbon markets should ensure that this commodity class is included in their trade surveillance programmes. Firms active in the origination of such credits should review and reinforce their governance and control arrangements over these activities and ensure that senior management has appropriate knowledge and oversight of these activities.