The New York Mercantile Exchange and a collection of investment banks are teaming up to create a new environmental marketplace.

NYMEX today announced the formation of the Green Exchange venture, with Evolution Markets Inc., Morgan Stanley Capital Group Inc., Credit Suisse, JPMorgan, Merrill Lynch, Tudor Investment Corp., ICAP and Constellation Energy. The new exchange will offer a comprehensive range of environmental futures, options, and swap contracts for markets focused on solutions to climate change, renewable energy, and other environmental challenges.

The Green Exchange products are expected to begin trading during the first quarter of 2008 and will be cleared by NYMEX. The venture is expected to launch as a U.S. Commodity Futures Trading Commission-regulated exchange during the first quarter of 2009, pending regulatory approval.

Initially, the Green Exchange intends to offer trading in global carbon-based contracts, such as carbon allowances under the European Union Emissions Trading Scheme, carbon credits under the U.N. Clean Development Mechanism, and verified greenhouse gas emission reductions used in accordance with voluntary carbon standards. The Green Exchange will also offer contracts for U.S. SO2 and NOx emissions allowance trading programs, as well as contracts for national Green-e certified voluntary renewable energy certificates.

NYMEX Chairman Richard Schaeffer stated, “The broad slate of new environmental products will perfectly complement NYMEX’s energy complex, enabling The Green Exchange customers to efficiently manage the cost of reducing their ‘carbon footprint.’ The Green Exchange expects to focus on both global and regional compliance trading while also building liquidity and demand for the highest quality voluntary standards in the market. Underlying all this will be the ability for all market participants to manage risk and take positions in environmental derivatives markets.”

The Green Exchange venture is in discussions with additional strategic partners from a broad cross section of market participants including banks, brokers, hedge funds, and energy and industrial corporations. It anticipates announcing additional strategic partners in the near future.