UPDATE 1-CME Group sees first trade for RIN futures

Fri May 17, 2013 2:51pm EDT

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* First trade was for 50,000 ethanol RINs

* Trade cleared at 80 cents per RIN

* Trade brokered by StarFuels Inc

NEW YORK, May 17 (Reuters) - The CME Group's newly-launched renewable identification number (RIN) futures contracts saw their first trade on Wednesday, according to a spokesman for the exchange operator.

The futures contract allows buyers to hedge their risk in the government-mandated renewable fuel credits in lots of 50,000 on the CME's New York Mercantile Exchange. The CME listed nine contracts across three types of RINs - ethanol, biodiesel and advanced biofuel - on Monday.

The first trade occurred for a 50,000 lot of ethanol RINs, the spokesman said. StarFuels Inc, a Jupiter, Florida-based brokerage, negotiated the first trade at 80 cents per RIN, according to a broker at the firm.

The CME's launch of RIN futures trading follows a similar move by rival IntercontinentalExchange, which launched a suite of RIN futures contracts on April 29. The ICE saw its first trade on May 7 for one lot of 10,000 advanced biofuel RINs at 88 cents each.

Both exchanges launched the futures contracts in response to increased volatility and surging prices RINs earlier this year.

Federal law requires refiners and importers to show the credits as proof of compliance with rules requiring the blending of renewable fuels such as ethanol and biodiesel into U.S. gasoline and diesel stocks. If refiners or importers don't blend enough ethanol, for instance, they must make up the difference by buying ethanol RIN credits.

Ethanol RINs surged from about 5 cents in October 2012 to more than a dollar each in early March. They were seen trading today at 84 cents each, a trader said.

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