Voluntary carbon markets allow carbon emitters to offset their emissions by purchasing carbon credits generated from projects that remove or reduce greenhouse gases (GHG) from the atmosphere.

The Bursa Carbon Exchange (BCX) is Malaysia’s voluntary carbon market exchange (VCM), and the first Shariah-compliant carbon exchange in the world. The voluntary carbon exchange is operated by Bursa Malaysia, one of the largest exchanges in ASEAN. The BCX is a global spot exchange that enables corporates to take practical climate mitigation action through the trading of carbon credits from projects with measurable climate action outcomes that adhere to the international standards.

The BCX will provide three modes of carbon trading, namely:

1. Auctions of carbon credits. [Our inaugural auction is targeted to take place on 16 March 2023, and will also be held from time to time, e.g. when a new category of standardised contract is introduced, to facilitate price discovery.]
2. Spot trading for standardised contracts of carbon credits.
3. Off-market transactions. [Off-market transactions refer to contract deals that are matched outside of our central order book and where the buyers and sellers want to utilise our onboarding (i.e. know-your-client processes), as well as clearing and settlement services for their direct carbon credit transactions.]

Voluntary carbon markets catalyse and provide financial incentive for developing and implementing mitigation activities, such as those reforesting mangroves and wetlands, or avoiding deforestation, or facilitating the improved or sustainable management of forested areas, or technology-based solutions that support emissions avoidance, reduction or removal from the atmosphere.

For Malaysia, a well-structured VCM could unlock Malaysia’s significant potential to generate nature-based carbon credits through its vast forest. The VCM can also provide a cost-recovery measure for corporates to implement climate-friendly technologies and solutions to decarbonise their operational carbon footprints.

At the state level, a VCM can spur forestry conservation projects that will provide both economic and environmental benefits. For instance, nature-based carbon project development can bring about additional benefits, such as multiplier effects on the local and state economy, on top of conservation and environmental benefits.

Companies (buyers) would benefit from purchasing carbon credits generated locally or internationally, demonstrating their commitment to sustainability by voluntarily offsetting some of their carbon emissions

It is Bursa Malaysia’s vision to become ASEAN’s leading, sustainable and globally connected marketplace. In line with that and our strategic focus, we aim to grow our suite of sustainability-themed products and services that create positive impacts for the planet and society. As the world transitions towards a net zero greenhouse gas (GHG) emissions future, VCMs will play an important role to facilitate capital flows towards climate-friendly projects and solutions that aim to avoid, reduce or remove GHG emissions.

We strongly believe a vibrant and well-functioning VCM will help catalyse green industries and accelerate our country’s progress towards net zero GHG emissions. The setting up of our very own VCM exchange, i.e. the Bursa Carbon Exchange (BCX), represents an important growth lever for us as we strive to build a diversified and sustainable exchange. Through BCX, we provide a rules-based and transparent approach for both buyers and sellers to transact carbon credits, and increased the accessibility and efficiency in carbon credit dealings to serve all stakeholders.

Our unique propositions are:

1. Bursa Malaysia is an established national exchange:

   BCX is wholly owned and operated by Bursa Malaysia, one of the largest and oldest bourses in ASEAN. Our status as a global commodities exchange and our strong equity base makes us a well-established player in the industry.

   1. Unique access to over 950 listed companies
   2. Access to Malaysian based carbon credits


2. World’s first Shariah Compliant Carbon Exchange:

   BCX is committed to responsible and fair business practices, financial inclusion, positive social impact and long-term value creation; principles that position us as a leader in the global Islamic capital markets.

3. Market Driven:

   BCX is focused on developing relevant, data driven solutions and innovative products to meet our customers' evolving needs.

   1. Reduced counterparty & delivery risk
   2. Instantaneous settlement
   3. High-quality carbon credits
   4. Appropriate due diligence onboarding processes for participants and carbon credits.

Yes, any entity can participate, subject to meeting the eligibility criteria under the BCX Rules. Under the BCX Rules, buyers and sellers must be incorporated entities, that can be foreign or local. They can be commodity traders/brokers, financial institutions, project developers or, corporates.

Simply download the onboarding form from our BCX microsite https://bcx.bursamalaysia.com or email [email protected] for more information.

There are many benefits, but the key ones are:

1. Reduction of the participant’s emissions footprint to meet emissions reduction target
2. Potential revenue generation and diversification of income to a more sustainable business
3. Cost recovery especially for a supplier of carbon credits coming from the hard-to-abate sectors
4. Being seen as more green provided that purchases of carbon credits are used strategically, to avoid allegations of greenwashing

Project types allowed include nature-based solutions (NBS) or tech-based solutions (removal or avoidance). These projects must adhere to methodologies accepted by leading international carbon credits standards, which currently include only Verified Carbon Standard (VCS) or better known as Verra.

BCX will enable the trading of standardised carbon contracts with underlying high quality carbon credits. We recognise that companies often avoid buying carbon credits due to uncertainty around assessing the quality and suitability of carbon projects. Standardized carbon contracts would simplify how buyers assess products. We will ensure that the carbon credits meet with the relevant contract specifications before they can be traded on BCX.

The primary trading mechanism will be the continuous trading of standardised carbon contracts.

Standardised carbon contracts represent a collection of credits from various projects that meet certain specified characteristics. Products can be standardized based on attributes that buyers use to differentiate and assess carbon credits. Typical attributes include project type (e.g., nature-based solutions (NBS) or tech-based, removal or avoidance), geography, co-benefits, and standards.

Yes, BCX is the first Shariah-compliant* carbon exchange in the world (*as pronounced by the Shariah Committee of Bursa Malaysia Islamic Services). In addition, the carbon credits have also been recognised as a Shariah-compliant asset by the said Shariah Committee.

Project developers and project proponents with projects registered under the Clean Development Mechanism (CDM) can potentially be suppliers of standardised carbon contracts for trading on BCX, provided that they are able to convert their issued Certified Emission Reductions (CERs) to Verified Carbon Units (VCUs) in the VCS registry and the credits’ vintage are 2016 onwards. Interested parties can reach out to us for further guidance on the CER conversion process via the interest registration form posted on our website.

Companies may choose to:

1. keep the underlying carbon credits in their BCX trading account for future use
2. sell the standardised contracts with the underlying carbon credits via BCX’s continuous trading platform
3. transfer the underlying carbon credits to their own registry account with Verra, or retire the underlying carbon credits to offset their carbon footprint