Flett Exchange
| Company type | Private |
|---|---|
| Industry | Environmental commodity exchange, Brokerage |
| Founded | 2006 |
| Founder | Michael Flett |
| Headquarters | Hoboken , United States |
Area served | United States (PJM Interconnection footprint) |
| Products | Solar Renewable Energy Certificates (SRECs) trading platform |
Flett Exchange is a brokerage and environmental commodity exchange headquartered in Hoboken, New Jersey. The firm focuses on the trading of Solar Renewable Energy Certificates (SRECs) across the United States.
History
Michael Flett, who has been affiliated with the New York Mercantile Exchange since 1996, started his professional journey as an energy broker. In 2007, he resolved a disciplinary matter concerning allegations of trading ahead of customer Market on Close orders from 2004 by agreeing to pay a $25,000 penalty, $74,700 in restitution, and accepting a cease-and-desist directive without admitting or denying any wrongdoing. Initially, he founded Flett Futures, Inc. as a brokerage firm on the exchange and transitioned it into a proprietary trading company by 2000. In 2006, Flett launched Flett Exchange with the objective of improving price discovery and enhancing liquidity within environmental markets.
Exchange
Flett Exchange provides a fully electronic platform that allows participants to trade SRECs online around the clock. The service covers states within the PJM Interconnection footprint, such as New Jersey, Maryland, Ohio, Washington, DC, Delaware, and Pennsylvania. It ranks among the three principal auction and exchange platforms in this region alongside SREC Marketplace and SRECTrade. By 2010, it was uniquely positioned as the sole exchange-driven marketplace for Maryland SRECs, although trading volumes remained modest.
Spot Market
The Spot Market represents the most active segment on Flett Exchange, where solar energy producers sell their SRECs in an open and competitive environment through the online system. Transactions are executed immediately: sellers secure prices upfront, transfer their SRECs from their GATS accounts to that of Flett Exchange’s GATS account, receive contracts instantly, and obtain payment on the same day via check or electronic means. Each month, over 7,000 solar owners participate in this market.
Auctions
SREC auctions are conducted primarily through two approaches: utility companies hosting auctions to attract sellers—such as New Jersey’s quarterly "SREC Based Financing Program"—and regular monthly auctions that match buyers with sellers.
Flett Exchange also organizes public auctions on behalf of governmental bodies including municipalities, townships, universities, and school districts. These auctions adhere to contractual timelines and provide an efficient avenue for public entities to liquidate their SREC holdings.
Long-term contracts
Additionally, Flett Exchange acts as an intermediary facilitating negotiations between counterparties involved in long-term SREC agreements.
Price transparency
In 2009, concerns regarding price transparency in green power marketing were raised by the National Renewable Energy Laboratory. To address this issue, Flett Exchange openly publishes pricing information from its Renewable Energy Certificate auctions and voluntary trades via its website and monthly newsletter. This openness aids market participants in conducting informed analyses. The firm offers daily SREC settlement prices covering New Jersey, Pennsylvania, Maryland, Washington DC, and Ohio.
Other Markets
Flett Exchange broadened its scope to include physical markets with the aim of improving price transparency across seafood, precious metals, and New York City Taxi Medallions, although its most notable achievements were within environmental commodity sectors.
In 2007, the company sought registration with the U.S. Commodity Futures Trading Commission as an Exempt Commercial Market to facilitate trading in energy products and uranium. This designation was maintained until 2009, after which Flett Exchange chose not to renew it.
The following year, 2008, saw the introduction of a trading platform dedicated to the Regional Greenhouse Gas Initiative cap-and-trade program; nonetheless, trading operations had ended by January 2010.