Thank you, Mr. Chairman.
My comments will focus primarily on giving the committee a good sense of the structure that could be put in place very rapidly in the event the government decided to go towards an emissions-trading market mechanism. Essentially, my focus is going to be specifically on some of the main features and aspects, with regards to the mechanics of this market, in the hope that the federal government policy will be to put in place the required regulatory framework, so that this market could be created.
Essentially, the Montreal Climate Exchange is a partnership that the Montreal Exchange and the Chicago Climate Exchange entered into about a year ago. It's a market-based solution, admittedly, and we see this as being one of the solutions--admittedly not the only one, but certainly one of the market solutions that can be used to reduce greenhouse gases.
Essentially, the Montreal Exchange, just for your background, is Canada's financial derivatives market by virtue of an arrangement with the Toronto Stock Exchange that dates back to 1999. We decided back then that Toronto would focus on the cash business, and Montreal would focus on the derivatives business. Essentially, if there is a decision made by the government to launch an emissions market in Canada--and this is before 2009, because 2009 is the time at which our arrangement for the TSX comes to an end--the TSX could not do a futures market, and we could not do a cash market. We would certainly find ways to cooperate. But at the outset, I think all would comment that this kind of market would lend itself primarily to a derivatives market; hence the role of the Montreal Exchange, and hence the reason we took a leadership role in proposing the climate exchange that we are now proposing.
With regard to the Montreal Exchange, we currently trade futures and options in both equities and fixed income. On a daily basis, we do about $70 billion worth of notional value. We run a book of about $600 billion to $700 billion of notional risks. All this is conducted through something called the Canadian Derivatives Clearing Corporation. I think it's very important for the members of the committee to understand the importance of a clearing corporation in a derivatives market, whatever that derivatives market is. Montreal, through CDCC, has the only derivatives clearing corporation in Canada. It's a double-A-rated Standard & Poor's institution. As I said, without that mechanism, essentially you don't get the counter-party risk that you need to have for a market to operate, whatever the underlying commodity or the financial instrument in place may be.
Also with regard to the Montreal Exchange, we are the operators of a company called the Boston Options Exchange. It's one of the six options markets in the U.S. We operate that out of Montreal. We are the first non-U.S. exchange recognized by the Securities Exchange Commission to operate a U.S. market.
We are also in partnership with the New York Mercantile Exchange, something we announced most recently. We're planning to open an energy market that will be based in Calgary.
Finally, if I can be allowed, I'd simply mention that we filed a prospectus to become a publicly traded company. I invite all the committee members to go to our website. You can access our prospectus and you can get detailed information on our company on our website.
With regard to our partner, the Chicago Climate Change, CCX is a leader in environmental finance. There's no doubt about that. The gentleman who runs it, Dr. Richard Sandor, is known to be pre-eminent in his field. They are also the operators of the European Climate Exchange, which is based in London. It's the largest climate exchange currently in business.
The reason that Montreal decided to partner with the Chicago Climate Exchange, first of all, is that this is going to be a global business. There are just no two ways about it. We've got to recognize that. Secondly, if you combine the strengths of two companies, like CCX and like Montreal Exchange, you have a situation in which we can rapidly launch a very sophisticated, high-performing exchange in a very short while with minimal costs. Chicago Climate Exchange brings intellectual capital that is unique. Montreal Exchange brings the infrastructure, self-regulatory technology, and the risk management. So this is why we decided that the fastest way, and the best thing to do, was to partner with the Chicago Climate Exchange.
Rapidly, and you've heard these before, the advantages of a market-based solution are numerous. It's cost-effective for companies in terms of managing costs. We think it will allow companies better planning with regard to their greenhouse emission programs, all because, of course, of a transparent price signal. That is the key thing.
Without a structured, standardized market, we're going to push the market either offshore or over the counter. But an over-the-counter market is opaque, it's tough to read, and it's unfair to the small players. So as much as we will hear different arguments in different ways, the reality is that companies will want to monetize their credits in one form or another, or Canadian companies, independently of Canadian law, will have to hedge themselves against the environmental risk associated with greenhouse emissions.
So they're going to seek ways of doing this. If we don't provide them with a standardized environment to do so, then who will step in? It will be your large banks, your C.S. First Boston and your UBS Warburg, and I'm very careful here, because they're all partners in the Montreal Exchange. But it's going to be an over-the-counter market, very expensive, not transparent, and very difficult for all the emitters to be able to know exactly what the price signal is.
At the risk of repeating myself, the benefits of a regulated exchange, the transparency, the liquidity that it will bring to the marketplace, all this, of course, in a self-regulated and regulated environment.... I say self-regulated; the Montreal Exchange is an SRO--as is the Toronto Stock Exchange, for that matter--where we are responsible for regulating our markets according to very strict regimes imposed on us by the securities commissions in Canada, and the same rules would apply to the climate market here.
In terms of what we need from the government, we need definition of targets. We need definitions of eligible credits. We need an effective date of implementation. We also need adoption of measures and verification in conformity, and of course we need the government to select a registry, to register the credits.
Essentially, with regard to the Montreal Climate Exchange, we could be ready within months. We've already begun discussions with a regulator on the specifications of the contracts. Things are moving very rapidly, so as you can see, we are remaining very proactive in the hope that this market will be given the green light by the federal government.
I will stop here, sir, because I believe my time is almost up. I'll be very glad to answer your questions. Thank you.