Nasdaq launches carbon credits technology to tackle 'inflexible' operations
The technology uses 'smart contract technology' and will automate asset servicing and settlement procedures.
The service aims to support the development and institutionalisation of global carbon markets, as it will allow market operators and registries to create standardised digital credits and distribute them throughout the transaction lifecycle.
The operation of carbon credits was described by Nasdaq as «inflexible», due to its bilateral trading and «heavy» reliance on manual interaction. This has led to an absence of standardisation, which is a barrier to attracting capital flows, the firm said.
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Nasdaq has also developed a carbon taxonomy framework that can incorporate new types of credit as the market evolves, as well as a set of APIs that will allow participants to interact across the market.
The firm claimed these operations will help establish a «standardised, trusted ecosystem capable of attracting high-quality liquidity from a variety of investors».
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Roland Chai, executive vice president and head of marketplace technology at Nasdaq, said: «Fragmented technology choices in the trading and settlement of carbon credits has prevented the carbon industry from growing and maturing as an asset class.
»A lack of system flexibility, standardisation, and connectivity has made it challenging for critical infrastructure providers and institutional investors to access the market in a meaningful way.
«Bringing institutional-grade technology to underpin the market will drive ever-greater liquidity across carbon marketplaces and open the possibility of greater interoperability between registries in the future.»
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