Parties - Emissions Annex Provision
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EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions
Section Parties in a Nutshell™ Use at your own risk, campers!
Full text of Section Parties
Comparison See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs
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Content and comparisons
Some wiggliness with words here: in an Allowances Transaction one is either delivering Allowances, in which case you are the Seller of a Forward Sale Transaction, the Seller of a Call Option (i.e., you have the obligation to deliver Allowances when called) or the Buyer of a Put Option (i.e., you have the right to deliver Allowances), or you are receiving Allowances, in which case you are the Buyer under a Forward Purchase Transaction, the Buyer of a Call Option (i.e., you have the right to call for Allowances to be delivered to you) or you are the Seller of a Put Option (i.e., you have the obligation to take delivery Allowances when they are put to you).
The EFET Allowances Appendix prefers just Seller and Buyer and doesn’t really use the term “Delivering Party” or “Receiving Party” — except in a completely different context relating to tax, which is sort of stupid, , but the IETA Master Agreement and the ISDA EU Emissions Annex have a bob each way.
Summary
Dear old ISDA’s crack drafting squad™ have even managed to make a dog’s breakfast of this, by introducing two terms for the same party, depending on its role in the Transaction, and the type of Transaction.
One may be either a Buyer or a Seller; in a Forward, the Buyer always receives and the Seller always delivers.
But for an Option, depending on whether it is a Call or a Put, a Buyer may be a Delivering Party or a Receiving Party.
It all seems a bit much like hard work, doesn’t it. Not helped by the terms being used differently in the IETA Master Agreement and EFET Allowances Appendix.
See also
In general terms: