13.4(c) - IETA Provision

Revision as of 17:36, 16 October 2023 by Amwelladmin (talk | contribs) (Removed redirect to Suspension Event - IETA Provision)
IETA Emissions Trading Master Agreement

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13.4(c) in a Nutshell

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13.4(c) in all its glory

13.4(c) In the event that Period Traded Allowances are Transferred to the Receiving Party on or before the Delayed Delivery Date following the occurrence of a Suspension Event as contemplated by sub-clause (a) above, the Receiving Party agrees to pay the Delivering Party the Contract Amount adjusted by the Cost of Carry Amount. For the avoidance of doubt, any adjustment of the Contract Amount will be identified in the relevant Statement sent to the Receiving Party.

Comparison

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Resources and Navigation

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Overview

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Summary

What is going on here, then?

Should there be a Suspension Event, the person meaning to deliver the Allowances, and receive cash payment on date X cannot, and will therefore start to get anxious emails from her treasury department. Remember, at this point she wants cash, has (Q.E.D.) no interest in the Allowances, and through no fault of her own is out of pocket.

Therefore the Seller agrees to pay her a Cost of Carry Amount. This is essentially interest at an agreed rate on the Cash Payment that was due, for the duration of the the Suspension Event.

The funny thing is what happens if the Suspension Event has not lifted by the Long Stop Date. Here the transaction is deemed to be irretrievably broken — and, per the consensus of Carbon Squad, the Transaction should therefore be cancelled and just forotten about. Any amounts already paid must be refunded (except where Allowances were delivered against those payments), and everyone walks away and pretends it never happened. This is the “then I woke up and it was all a dream” method of disruption resolution.

This we find utterly extraordinary. Your Cost of Carry Amount accrues ... accrues ... accrues ... and then suddenly in a puff of illogic, on a completely arbitrary Long Stop Date, it just vanishes, along with, presumably, all the rest of the money you stumped up in good faith to finance some other so-and-so’s Allowance obligations. What on earth were they thinking?

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  • The JC’s famous Nutshell summary of this clause

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See also

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References