The deal, worth about 125,000, has been voluntarily referred by Valpak to the Office of Fair Trading for approval as it is the UK's largest compliance scheme. There is some uncertainty as to whether OFT approval is needed for the deal but a decision is not expected for some weeks.
Valpak said that the investment will let the Environment Exchange accelerate the development and scope of its services, including the development of forward trading in PRNs (packaging waste recovery notes). “At a time when targets will increase substantially, Valpak believes that a viable trading floor for PRNs is helpful to the UK, to complement negotiated arrangements between reprocessors and compliance schemes.”
Jonson Cox, chief executive of Valpak, commented: “We are confident that we have put together a deal with The Environment Exchange which will help to develop and expand the business without compromising the integrity of the service that it already provides.
Potential
“We believe that there is the potential for electronic trading of PRNs and other traded compliance notes to grow significantly in the future. Valpak’s deal with The Environment Exchange will provide the expertise and investment to allow the business to develop this area.”
Angus Macpherson, managing director of the Environment Exchange commented: “We are delighted that Valpak is investing in the Environment Exchange. The agreement ensures that participants’ confidentiality will be observed at all times. Valpak will be treated as any other trader on the Exchange.”
Mr Cox also emphasised that the deal has been drawn up to ensure the confidentiality and interests of the traders on The Environment Exchange will not be compromised. “I would make it absolutely clear that we cannot take control of this. We are not trying to manipulate the market – we have put in place really onerous confidentiality provisions. We will have no information on any individual trading on the exchange and no discretion on who joins the trading platform.”
Other new shareholders would be welcome to take a stake in the Exchange, Mr Cox said. “The final financial structure could be 40–40–20 with the Exchange management holding the 20% share.”
Mr Cox emphasised that he viewed the role of the Exchange as working at the margins of PRN activity, helping to handle surpluses and deficits. “I don't ever see the majority of PRNs going through the Exchange.”
Committed
Valpak itself will continue to use the Exchange, which it recently joined, but only trading when necessary. Instead, Mr Cox emphasised that it remains totally committed to working with its reprocessors under long term contracts. “What is really important is the funding we put in to increasing recycling through long term contracts with our reprocessors.”
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