UPDATE 1-AirShares carbon fund plans IPO to raise $250 mln

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WASHINGTON, Aug 14 (Reuters) - AirShares EU Carbon Allowances Fund plans an initial public offering to raise up to $250 million, the commodity pool said in a Tuesday filing with the U.S. Securities and Exchange Commission.

"The shares, which will be continuously offered through ALPS Distributors Inc., as marketing agent, may be purchased from the fund only in one or more blocks of 100,000 shares, with each block called a basket," AirShares said.

The fund will accept subscriptions at $2.5 million per basket, it said.

AirShares shares, or units, will be traded on NYSE Arca, the company said.

The fund will trade exchange-traded futures contracts for carbon equivalent emissions allowances eligible for trading under the European Union Emissions Trading Scheme, the company said.

The "cap and trade" emissions trading scheme was created by the EU to reduce emissions of greenhouses gases from 2008 to 2012, as required by the international Kyoto agreement.

AirShares said the investment objective of the fund is to give investors results that generally correspond to the performance of the nearest December expiration exchange-traded futures contracts for carbon equivalent emissions allowances, beginning with contracts expiring in December 2008.

The fund will not be leveraged and will hold long positions in futures contracts on carbon emission allowances, it said.

"Initially, the fund will hold contracts that have been developed by the European Climate Exchange and are listed and admitted to trading on ICE Futures on the electronic platform owned and operated by Intercontinental Exchange, Inc., known as the ICE Platform," it said.

Proceeds from the IPO will be used to "engage in the trading of futures contracts" on carbon emission allowances and to track the value of those contracts, it said.

AirShares' filing with the SEC was posted on the Web here . (Reporting by Julie Vorman, editing by Jeffrey Benkoe)