Template:M summ EUA Annex Suspension: Difference between revisions

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 A curiosity to which the [[JC]] has not yet found a plausible answer is why there is a [[Cost of Carry Amount - Emissions Annex Provision|Cost of Carry]] adjustment for {{euaprov|Suspension Event}}s that run over the scheduled {{euaprov|Delivery Date}}, but not for other, ordinary {{euaprov|Settlement Disruption Event}}s (or for that matter, [[Failure to Deliver - Emissions Annex Provision|Failures to Deliver]]).
+===Cost of Carry===
+''Someone'' has got a mind infested by nepharious phantoms, readers: either the {{icds}} does, collectively, or the JC does. We are totally not ruling out the JC, to be clear. But this is too weird.
+Concept is this:
+I sold {{euaprov|Allowances}} to you, due to settle on date T. On that date, we are due to DVP: you give me cash; I give you {{euaprov|Allowances}}.
+''But'' on that date, I am “[[Suspension - Emissions Annex Provision|suspended]]” and, through no fault of my own, I can’t settle the {{euaprov|Allowances}} to you. The system is on the Fritz. The EU has gone down. Something like that. Something that is nothing to do with me.
+You could, of course, pay me the cash no problem and I’ll punt you the Allowances as soon as the suspension lifts — but who does that, in these credit-straitened times? So we suspend, and wait for the disruption to clear. This usually takes a few days (we are given to understand there has been one meaningful suspension in the market in five years, and it lasted a couple of weeks. Don’t quote me on this).
+So far, so hoopy. But the question arises: How should we adjust our payment obligations? I was expecting cash from you on T, and now I’m not getting it. But I no longer want or need the {{euaprov|Allowances}}, so the fact that I still ''have'' them is beside the point for me: they are clogging up my garage, stopping me putting anything else in it: in the vernacular, I am having to fund these things, even though I thought I sold them to you. I am obliged to continue to ''carry'' them. This costs me. (You ever met my Treasury guys? They aren’t fun). So this settlement disruption is ''your'' problem.
+So we agree you should pat me a {{euaprov|Cost of Carry Amount}} to compensate me for my continuing funding cost for holding these {{euaprov|Allowances}}.