Shanghai Clearing House has launched carbon emission allowance repo clearing services, expanding its carbon finance offerings under the guidance of the People's Bank of China.

The services were rolled out in the Hubei and Guangdong regional carbon markets on September 17, with multiple institutions participating in trading. Banks including Industrial and Commercial Bank of China and Bank of China provided fund settlement services.

The business leverages the existing payment and clearing system and connects financial infrastructure directly to carbon markets, enabling efficient and secure operation of the full chain of carbon emission allowance repo trading, clearing and settlement. It marks another practice by Shanghai Clearing House in carbon finance, following its carbon emission allowance forward central counterparty clearing and online pledge information services.

The service is based on the commodity spot clearing system, known as the Clearing Pass, and aims to help emission-controlled enterprises unlock carbon assets and broaden financing channels while accumulating experience for future nationwide carbon market services.

The business features three core characteristics: 1) full-process online operations covering trading quotes, agreement signing, carbon emission allowance and fund clearing and settlement, and early or deferred repurchase applications; 2) bilateral gross settlement based on participants' physical fund accounts, with real-time cross-bank settlement and same-day availability of funds; and 3) helping emission-controlled enterprises obtain funds for production and energy-saving purposes through carbon emission allowance repos without affecting compliance obligations.

The Hubei carbon market saw its first transaction in June, with Hubei Three Gorges New Building Materials Co., Ltd. raising over 10 million yuan ($1.48 million) through Shenwan Hongyuan Securities, easing short-term funding pressure. The Guangdong carbon market launched its first batch of transactions in September.

Shanghai Clearing House said it will continue to deepen its financial infrastructure functions, enrich carbon financial instruments and enhance clearing services to support China's green and low-carbon development strategy.