EU Emissions Allowance Transaction Annex to the 2005 ISDA Commodity Definitions
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Multiple Exercise in a Nutshell™
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Multiple Exercise in all its glory
- (1) If “Multiple Exercise” is specified to be applicable to an EU Emissions Allowance Transaction which is an American Allowance Option Transaction or a Bermuda Allowance Option Transaction, Buyer may exercise all or less than all the unexercised Options on one or more Business Days during the Exercise Period but (except as set forth below) on any such Business Day may not exercise less than the Minimum Number of Options or more than the Maximum Number of Options and, if a number is specified as “Integral Multiple” in the related Confirmation, the number of exercised Options must be equal to, or be an integral multiple of, the number so specified. Except as set forth below, any attempt to exercise on any such Business Day:
- (A) more than the Maximum Number of Options will be deemed to be an exercise of the Maximum Number of Options (the number of Options exceeding the Maximum Number of Options being deemed to remain unexercised);
- (B) less than the Minimum Number of Options will be ineffective; and
- (C) an amount of Options not equal to or an integral multiple of the Integral Multiple will be deemed to be an exercise of a number of Options equal to the next lowest integral multiple of the Integral Multiple (the number of Options exceeding that number being deemed to remain unexercised).
- (2) Notwithstanding the foregoing, on any such Business Day, Buyer may exercise any number of Options that does not exceed the Maximum Number of Options if it exercises all the Options remaining unexercised. On the Expiration Date, Buyer may exercise any number of Options remaining unexercised.
- (3) “Minimum Number of Options” means, in respect of an Allowance Option Transaction to which Multiple Exercise is applicable, the number specified as such in the related Confirmation.
- (4) “Maximum Number of Options” means, in respect of an Allowance Option Transaction to which Multiple Exercise is applicable, the number specified as such in the related Confirmation.
Resources and Navigation
“Multiple Exercise” crops up in a number of places in the extended ISDA Universe. The canonical definition is “Multiple Exercise” in the 2021 ISDA Interest Rate Derivatives Definitions, but it also shows up in the 2002 ISDA Equity Derivatives Definitions (Multiple Exercise) and the ISDA EU Emissions Annex (Multiple Exercise), in each case getting to the same point, but in marginally different language.
A mechanical provision governing how those Options that can be exercised in an interim fashion (namely, Bermuda-style and American-style Options) can be exercised. If the Confirmation specifies exercise Integral Multiples of a Number of Options or specifies Maximum Number of Options or Minimum Number of Options, then you must comply with those on any exercise date, and if you don’t your exercise will be rounded down as appropriate (or cancelled if you are below the minimum).
None of this applies on the Expiry Date, at which point you may exercise to your heart’s content in whatever Number of Options that may be remaining, as long as you exercise the whole lot.
Also, if less than the Minimum Notional Amount is left of the transaction at any time, you can exercise that whole amount on any Exercise Date.
It doesn’t apply to European-style Options because you can’t exercise them at any time before the Expiry Date, so you have to exercise the whole lot at once.
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Template:M sa EUA Annex Multiple Exercise