Template:M summ IETA 5.1(c)

Note that odd coda in Section 5.1(c) where the Receiving Party agrees that the Delivering Party’s obligation is limited to :

• an obligation to transfer Period Traded Allowances (which is fine, and no more than what is specified be be deliverable under the Transaction in any case)
• from any of the Delivering Party’s Holding Accounts — and this one baffles us, especially as it says the the Delivering Party is “limited to” delivering from this account, rather than being obliged to deliver from that account, in which case it still has the problem of ensuring there are Allowances in the account in a fit state to deliver. We have more to say about this in the premium section.
• to the Receiving Party’s Holding Account — so we suppose this heads off the Receiving Party doing something odd like saying, “oh, can you deliver it to my Russian subsidiary’s Holding Account” or “can you leave it on a fire hydrant outside Raffles Hotel in Singapore”. But again this one seems to state the bleeding obvious. The contract says Delivering Party must deliver to Receiving Party’s Holding Account, so that is all Delivering Party is obliged to do.

This mirrors Section (d)(i)(2)(B) of the ISDA EU Emissions Annex — or rather, we fancy, that part of the ISDA EU Emissions Annex mirrors it, because the language is strikingly similar in its bafflability. Compare:

(B) Notwithstanding Part(d)(i)(2)(A) above, if Delivering Party has one or more Specified Holding Accounts for the relevant EU Emissions Allowance Transaction, Delivering Party’s obligation to deliver Allowances under an EU Emissions Allowance Transaction shall be limited to an obligation to deliver from any such Specified Holding Account of Delivering Party to the relevant Specified Holding Account of Receiving Party.