Template:M summ EUA Annex (d)(i)(1)

Who pays what, where and to whom, for Option and Forward Transactions.

The JC is no great fan of definitions, but god only knows they would have come in handy here. You know, a “Payment Amount” and a “Delivery Amount” might have been nice, given they are the two key concepts in Options and Forward Transactions. Okay, Allowanvces to be Delivered is the physical half of that, but it is a rubbish definier. And yes, I did just make that word up.

Cash Settlement: Trick question. There is no provision for cash-settlement under the ISDA Emissions Annex. Will that stop counterparties asking you to specify a settlement method? Probably not. Does it matter? Also probably not. What if you want a cash settlement option? Not out of the ballpark — ones eligibility for EMIR, and as such hedge exempotions, might depend on whether the forward is cash settlable, in theory, or not. There is no good reason for this: it springs from the paranoid brow of those toiler legal counsel who trying to parse the eligibility or Emissions derivatives under the refitted delegated regulations of MiFID 2 — our advice is just don’t go there — but you just never know.