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 all its glory
See our natty emissions comparison table between the IETA, EFET and ISDA versions of emissions trading docs
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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.
- The JC’s famous Nutshell™ summary of this clause