Collateralised emissions obligations

Myths and legends of the market The JC’s guide to the foundational mythology of the markets.™ →Go uptown Top Trumps®Financial Weapons of Mass Destruction® Emissions Allowance “Wanna stop frying the planet? Start here. Will it help? Who knows? The forward curve is in contango: who cares!” Docs Take your pick: IETA, ISDA or even EFET: none of them good. But at least you have flexibility in mediocrity 4 Amendability Nope. The EU can amend them, but you can’t. 0 Collateral They aren’t anyone’s obligations as such. In fact, they’re more like a sort of unofficial, made up, (hush) crypto. No credit risk! DNA Transferability With an account at the Union Registry, sure! 7 Leverage Not unless you do a CEmO, and we just made that up. 0 Fright-o-meter Not directly scary as long as there is an EU with Greta Thundberg in it, but global warming is going to lead to Armageddon so, you know, indirectly. 5 Index: Click ᐅ to expand: Mythology Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Collateralised Emissions Obligation, an apocryphal transaction type that did not, but had it existed, surely would have, precipitated a global financial crisis, as carbon traders, hopped-up on absurd amounts of synthetic alpha blew up not just the financial markets but the entire planetary ecosystem with their leveraged bets on the squirrely commitments of G20 nations to act on climate change.

“A five-times leveraged derivative of hot air!” traders would chortle, selling these things out to the most vulnerable and credulous people in society: minimum-wage hospitality workers, the elderly, the infirm, the illiterate and regional German landesbanks.