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(10) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, OTF, or an MTF; | (10) Options, futures, swaps, forward rate agreements and any other derivative contracts relating to climatic variables, freight rates or inflation rates or other official economic statistics that must be settled in cash or may be settled in cash at the option of one of the parties other than by reason of default or other termination event, as well as any other derivative contracts relating to assets, rights, obligations, indices and measures not otherwise mentioned in this Section, which have the characteristics of other derivative financial instruments, having regard to whether, inter alia, they are traded on a regulated market, OTF, or an MTF; | ||
(11) [[Emission allowances]] consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).}}}} | (11) [[Emission allowances]] consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme).}}}}Points to note: | ||
You must have a taste for multi-dimensional chess if you want to understand what is required in the world of commodities and [[emission allowances]]. To wit: | |||
*''Actual'' emission allowances, resembling as they do abstract financial instruments, are ''in'' scope. | |||
*'''Actual''' commodities, being consumable, perishable, paint-rocks yellow and defraudable, are ''out'' of scope. | |||
*All emission allowances derivatives, whether physically- or cash-settled, are in scope. | |||
*Cash-settled commodity derivatives — including ones where either party has an option to cash-settle — are in scope. | |||
*Physically-settled commodity derivatives are out of scope ... ''unless'' they are traded on an EU [[trading venue]], (i.e, [[OTC]] physically-settled commodity derivatives are in scope ... except “wholesale energy products traded on an OTF that must be physically settled” - which are out of scope. | |||
*[[Physically-settled]] [[commodity derivatives]] which would otherwise be out of scope, if not used “for commercial purposes” and having “the characteristics of [[derivative]] [[financial instruments]]” are ''in'' scope. | |||
*Weather derivatives, freight, inflation and economic indicator derivatives that can be cash-settled (it would be kind of fun having physically settled weather derivatives wouldn’t it) are in scope. | |||