Parties - Emissions Annex Provision

EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions A Jolly Contrarian owner’s manual™ Parties 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. You can even ask questions! Ask about it here. Parties in all its glory Buyer: Means, in respect of an EU Emissions Allowance Transaction, the party specified as such in the related Confirmation. Seller: Means, in respect of an EU Emissions Allowance Transaction, the party specified as such in the related Confirmation. Delivering Party: Means, in respect of an EU Emissions Allowance Transaction that is: (1) an Allowance Forward Transaction, the Seller; (2) an Allowance Option Transaction which is a Call, the Seller; or (3) an Allowance Option Transaction which is a Put, the Buyer. Receiving Party: Means, in respect of an EU Emissions Allowance Transaction that is: (1) an Allowance Forward Transaction, the Buyer; (2) an Allowance Option Transaction which is a Call, the Buyer; or (3) an Allowance Option Transaction which is a Put, the Seller. 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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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

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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.

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

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See also

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In general terms:

• Option
• Forward
• Put
• Call