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| (11) [[Emission allowances]] consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).}}}}Points to note: | | (11) [[Emission allowances]] consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).}}}}Points to note: |
| | | {{commodity regulation}} |
| You must have a taste for multi-dimensional chess if you want to understand what is required in the world of commodities and [[emission allowances]]. To wit:
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| *''Actual'' emission allowances, resembling as they do abstract financial instruments, are ''in'' scope.
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| *'''Actual''' commodities, being consumable, perishable, paint-rocks yellow and defraudable, are ''out'' of scope.
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| *All emission allowances derivatives, whether physically- or cash-settled, are in scope.
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| *Cash-settled commodity derivatives — including ones where either party has an option to cash-settle — are in scope.
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| *Physically-settled commodity derivatives are out of scope ... ''unless'' they are traded on an EU [[trading venue]], (i.e, [[OTC]] physically-settled commodity derivatives are in scope ... except “wholesale energy products traded on an OTF that must be physically settled” - which are out of scope.
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| *[[Physically-settled]] [[commodity derivatives]] which would otherwise be out of scope, if not used “for commercial purposes” and having “the characteristics of [[derivative]] [[financial instruments]]” are ''in'' scope.
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| *Weather derivatives, freight, inflation and economic indicator derivatives that can be cash-settled (it would be kind of fun having physically settled weather derivatives wouldn’t it) are in scope.
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