After I-RECs Exit: Whats Next for Renewable Energy Procurement in China?

Investors should be aware that there is no assurance that a fund’s use of such strategies will succeed. “As demand for alternative investments ats stock meaning continues to grow, we will continue to look for opportunities to expand and diversify the fund,” concludes Mollenhauer. As of Tuesday, it surpassed $71,000, hitting near its all-time highs as hedging demand grows. While it has similar liquidity to cash, it’s much more speculative, Miller noted. Investors may feel queasy about the asset as it hits peak prices near $2,800 per ounce. But you have to consider the value of the dollar against that backdrop, Miller noted.

What Do Alternative Trading Systems Do?

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Finding alternative investments in the floating-rate debt market

So, while ATSs offer some enticing benefits, it’s important to weigh those against the potential challenges. Do your research, understand the risks, and choose a platform that aligns with your trading goals and risk tolerance. This can give you access to new tools and platforms that traditional exchanges might not offer.

Existing and Emerging Practices of Power Purchase Agreements (PPA)

Furthermore, technologies such as blockchain are being explored for their potential to enhance transparency, security, and efficiency within these systems. It allows for the rapid processing of vast quantities of data, high-frequency trading, and the immediate execution of trades. The subsequent decades witnessed the proliferation of ATS, driven by technological advancements and regulatory changes that promoted competition and transparency in the securities industry. «Alternative trading system (ATS)» is the terminology used in the U.S. and Canada.

Dark pools are also used by investors who do not want their buying or selling decisions to affect the stock or the market. If you’re seeking alternatives to traditional stock exchanges and are considering ATS platforms, you’ll also want to know about the best brokers for day trading. The right broker can make a significant difference in your trading experience, especially when using ATS platforms. ATS platforms offer several advantages, such as lower fees and quicker trades. However, they also come with their share of criticisms, mainly centered around transparency and market manipulation.

Additionally, the validity of vintages allowed to be used for claims are now limited to two years, resulting in certificates with older vintages being dumped and depressing the overall market price. As of September 2024, the monthly traded price was at 6.3 RMB per certificate, down from 31.7 RMB per certificate a year ago. Some funds may use investment strategies involving derivatives and other transactions that may have a leveraging effect on the fund.

In contrast, for corporates looking to comply with renewable energy procurement targets, unbundled purchase of GECs still represents an add-on cost to their electricity cost. Driven by the price signals, and as the green power market itself undergoes continuous refinement of the trading rules, bundled trading grow in popularity quickly as seen in Figure 4, representing 54% of the overall GECs traded in 2024. While most retail investors place trades through a brokerage, it’s not the only way to buy and sell securities. There are also alternative trading systems, largely used by institutional investors.

In ATS trading, bids are offers to buy a particular asset at a specified price. Unlike traditional trading systems, the names and lists of participating parties are often not publicly disclosed to maintain anonymity. As ATS operate globally, they need to navigate a complex and diverse regulatory landscape. Changes in regulations or failure to comply with regulatory requirements can pose significant risks. ATS usually operate with lower overheads than traditional exchanges, largely due to their technology-driven operations.

• A financial professional will offer guidance based on the information provided and offer a no-obligation call to better understand your situation.
• The operations of these platforms can differ significantly, offering different levels of access and serving different purposes.
• Some examples of alternative trading systems include electronic communication networks, dark pools, crossing networks and call markets.
• Unlike stock exchanges, ATS do not have the same level of regulatory oversight and are not required to disclose as much information.
• For example, the SEC Regulation ATS oversees the function and operation of an ATS.

The securities of smaller, less well known companies can be more volatile than those of larger companies. Investors with a bit more of a risk appetite who want to maintain a yield just over 5% should consider investment-grade corporate bonds, which are AAA to BB-rated, Malek said. And anyway, the yield curve is inverted, meaning there’s no term premium, with the best yields coming from the one-month out to the six-month Treasury. All content on this site is for informational purposes only and does not constitute financial advice. Consult relevant financial professionals in your country of residence to get personalized advice before you make any trading or investing decisions.

An ATS is an electronic venue that also brings buyers and sellers together; however, it does not have any regulatory responsibilities (though it is regulated by the SEC) and trades both listed and unlisted securities. China’s forward market remains constrained by price collars, and additionally significant power generation (at least for renewables) is still under grid offtake contracts at regulated prices, limiting incentives for generators. However, as the market matures and price restrictions ease, the appeal of financial PPAs is expected to grow for generators looking to mitigate wholesale price risks.

Broker-dealers use ATS to provide their clients with access to additional liquidity and potential price improvements. Securities and Exchange Commission (SEC) introduced regulations permitting electronic exchanges. In the wake of I-REC’s exit, GEC has presented itself as the only viable alternative. We expect relevant international standards to catch up with Chinese policy development in the near future. The I-REC Standard came to a halt in China in September 2024, as Chinese regulators made sweeping changes to the country’s green power certification scheme.

Limiting large swings in share price every time institutions buy or sell keeps market volatility much lower than it would otherwise be. In China’s burgeoning green power market, corporate power purchase agreements (PPAs) are gaining traction. The dominant practice involves annual contracts that peg green power prices to thermal power rates. Typically, corporations partner with power retailers, relying on thermal sources to bridge any gaps in hourly demand. An emerging alternative benchmarks prices against a renewable project’s levelised cost of electricity (LCOE). These contracts, often with longer tenors, require energy users to manage their demand against supplied volumes.

These violations may be more common in ATSs than in national exchanges because ATSs face fewer regulations. In this new frontier of renewable energy procurement, strategic foresight and agile execution will be the hallmarks of corporate leadership in sustainability. A notable trend in the evolving landscape is the shift towards bundled green power trading. This approach, which combines GECs with electricity through Power Purchase Agreements (PPAs), offers enhanced credibility and potential cost advantages compared to unbundled purchases.

This seismic shift has compelled companies – especially those previously relying exclusively on I-RECs to reduce Scope 2 emissions – to reevaluate their strategies and explore alternative avenues for sustainable energy procurement. As the world’s largest energy consumer and carbon emitter, China’s renewable electricity market holds significant implications for global Net Zero efforts. The International Renewable Energy Certificate (I-REC) is a globally recognised standard designed to track and verify the consumption of renewable energy.

The intention was to decentralize financial markets and break the duopoly of the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotations (NASDAQ). To comply with Regulation ATS, an ATS must register as a broker-dealer and file an initial operation report with the Commission on Form ATS before beginning operations. An ATS must file amendments to Form ATS to provide notice of any changes to its operations and must file a cessation of operation report on Form ATS if it closes. The requirements for filing reports using Form ATS are in Rule 301(b)(2) of Regulation ATS. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market or other conditions. Unless otherwise noted, the opinions provided are those of the speaker or author and not necessarily those of Fidelity Investments or its affiliates.

Low-float stocks, for instance, can offer unique trading opportunities but come with their own set of challenges. These stocks can be highly volatile and are often traded on ATS platforms. Unlike stock exchanges, ATS do not have the same level of regulatory oversight and are not required to disclose as much information. This can be both an advantage and a disadvantage, depending on your trading strategy and risk tolerance. While ATS platforms offer unique advantages, it’s crucial to understand other market dynamics like short interest.