Close-out Cost of Carry Rate - Emissions Annex Provision

EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions A Jolly Contrarian owner’s manual™ Close-out Cost of Carry Rate in a Nutshell™ The JC’s Nutshell™ summary of this term has moved uptown to the subscription-only ninja tier. For the cost of ½ a weekly 🍺 you can get it here. Sign up at Substack. Close-out Cost of Carry Rate in all its glory Close-out Cost of Carry Rate: Means a rate equal to the Floating Rate that would be determined for the period from the scheduled Payment Date to the Early Termination Date, if the Reset Date were the date that would be the Payment Date if delivery had been made on the Final Delivery Date or Final Compliance Date (as the case may be) and the applicable Floating Rate Option were “EUR-EONIA-OIS-COMPOUND”. edit Comparison See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs 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) Premium version of this page

Overview

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The comparison between the drafting for Close-out Cost of Carry Rate and ordinary Cost of Carry Rate illustrates the extent to which standards slipped for this project:

It is here: comparison.

simplifying them down to idiomatic and consistent English, the differences appear to be as follows:

Cost of Carry Rate	Close-out Cost of Carry Rate
The Floating Rate between the scheduled Payment Date and the Delayed Payment Date if the Reset Date were the Delayed Payment Date and the Floating Rate Option were “EUR-EONIA-OIS-COMPOUND”	The Floating Rate between the scheduled Payment Date and the Early Termination Date if the Reset Date were the Final Delivery Date and the Floating Rate Option were “EUR-EONIA-OIS-COMPOUND”

So the differences are only the length of the period (and this is really a mutatis mutandis sort of thing: For a Suspension Event, the delay comes, Q.E.D., to an end earlier than for a Failure to Deliver); and the Reset Date (i.e., the date you determine the Floating Rate), and that also is a mutatis mutandis thing, seeing as the rate is determined not at the beginning of the period but its end, and you don’t know how long the period will be.

In any case: there is no kind of penalty rate or anything like that. It is just that the levers you need to calculate the cost of carry for a failure to pay — where there are intervening Reconciliation Deadlines and so on — are subtly different. Different enough to justify all this verbiage? You decide.

Summary

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• The JC’s famous Nutshell™ summary of this clause

Template:M premium EUA Annex Close-out Cost of Carry Rate

See also

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• Cost of Carry Amount