Requirements under the Scheme - Emissions Annex Provision

EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions A Jolly Contrarian owner’s manual™ Resources and navigation Index: Click ᐅ to expand: ISDA Emissions TOC EUA Annex - Premium Emissions Pro tip: for tons of information about EU ETS and EU financial services regulation see Michał Głowacki’s magnificent emissions-euets.com website. Emissions trading documentation ISDA: EU Anatomy • EU Wikitext • EU Nutshell (premium) • UK Anatomy • UK Wikitext (to be merged into EU Anatomy) IETA: IETA Master Agreement • IETA Wikitext • IETA Nutshell (premium) EFET: EFET Allowances Appendix • EFET Allowances Wikitext • EFET Nutshell (premium) Section (d)(vi) in a Nutshell™ Use at your own risk, campers! (d)(vi) Scheme Requirements: Each party must: (1) ensure that on any Delivery Date it has at least one validly-registered Holding Account, and that all of its Specified Holding Accounts are validly registered, under the Registries Regulation and (2) where it is Delivering Party, ensure that it has nominated each of Receiving Party’s Specified Holding Account as a “trusted account” in its “trusted account list” for its own Specified Holding Accounts under the Registries Regulation; and (3) not give any Relevant Authority grounds to prevent the transfer of any Allowances required under any EU Emissions Allowance Transaction. view template Full text of Section (d)(vi) (d)(vi) Requirements under the Scheme Each party agrees with the other that, so long as either party has or may have any obligation under an EU Emissions Allowance Transaction, it shall: (1) ensure that on a Delivery Date or Delayed Delivery Date (as the case may be) it has one or more Holding Accounts validly registered in accordance with the Registries Regulation and where it has one or more Specified Holding Accounts, ensure that on a Delivery Date or Delayed Delivery Date (as the case may be) it has all such Specified Holding Accounts validly registered in accordance with the Registries Regulation ; (2) where it is Delivering Party, ensure that each Specified Holding Account of Receiving Party is nominated as a “trusted account” in its “trusted account list” for each of its Specified Holding Accounts (or other Holding Accounts, as applicable) for the purposes of the Registries Regulation; and (3) conduct its affairs so as not to give any Relevant Authority cause to block, suspend, refuse, reject or cancel the transfer (whether in whole or in part) of Allowances requested to be made pursuant to any EU Emissions Allowance Transaction. view template Comparison See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

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Summary

ISDA’s crack drafting squad™ to the max

Some of the more dismal drafting — outwardly innocuous, not having that “see if you can get through this tract without lashing out at nearby loved ones” vibe that characterises, say the regulatory initial margin credit support deed — but just lazy, fearful wordsmithing all the same, in a workaday provision, that should be uncontentious enough to invite unfussy, direct drafting.

For one thing, a Delayed Delivery Date is a sub-category of Delivery Date, so when you have said the latter you necessarily include the former: there is no need for that “Delivery Date or Delayed Delivery Date (as the case may be)” nonsense. Indeed, logically, one never needs to say, “as the case may be”: if the case isn’t, then it isn’t; if it is then it is. This puff of celery does nothing to advance matters.

What does this do?

This simply asks parties to an Emissions Transaction to make sure they have the necessary Holding Accounts — a “Specified Holding Account” is just the Holding Account you have specified in your Confirmation, so thanks for that one, gang — set up in the Union Registry and correctly configured so they can efficiently perform their settlement obligations. Have an account, add your counterparty’s account to your trusted list, and don’t behave like such a berk that you get thrown out of the system, or have transfers to and from your account frozen.

Knock on impacts

Note a failure to deliver by a Delivering Party won’t count as a formal Failure to Deliver if brought about because the Receiving Party has forgotten to set up a Holding Account, not added the Delivering Party’s Holding Account to its trusted account list, or generally behaved like such a berk that it gets thrown out of the system, or has its own account frozen.

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See also

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