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Template:M summ EUA Annex (d)(i)(1): Difference between revisions
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[[(d)(i)(1) - Emissions Annex Provision|Who]] pays what, where and to whom, for {{euaprov|Option}} and {{euaprov|Forward}} {{euaprov|Transaction}}s. | [[(d)(i)(1) - Emissions Annex Provision|Who]] pays what, where and to whom, for {{euaprov|Option}} and {{euaprov|Forward}} {{euaprov|Transaction}}s. | ||
The JC is no great fan of definitions, but god only knows they would have come in handy here. You know, a “{{euaprov|Payment Amount}}” and a “{{euaprov| | The JC is no great fan of definitions, but god only knows they would have come in handy here. You know, a “'''{{euaprov|Payment Amount}}'''” for {{euaprov|Forward Transaction}}s, and a “'''{{euaprov|Strike Amount}}'''” for {{euaprov|Option Transaction}}s might have been nice, given they are the two key concepts in {{euaprov|Option}}s and {{euaprov|Forward Transaction}}s. As for {{euaprov|Allowances to be Delivered}} — okay, there is at least a term for the physical half of that, but it’s rubbish. What about “'''{{euaprov|Delivery Amount}}'''”? | ||
Well, the JC has introduced these words into the nutshell summary to make life a bit easier to follow. Just remember they are not there in the real thing. Unless you put them in. | |||
'''{{euaprov|Cash Settlement}}''': Trick question. There ''is'' no provision for cash-settlement under the ISDA Emissions Annex. Will that stop counterparties asking you to specify a settlement method? Probably not. Does it matter? Also probably not. What if you ''want'' a cash settlement option? Not out of the ballpark — ones eligibility for EMIR, and as such hedge exempotions, might depend on whether the forward is cash settlable, in theory, or not. There is no good reason for this: it springs from the paranoid brow of those toiler legal counsel who trying to parse the [[De minimis threshold test|eligibility or Emissions derivatives under the refitted delegated regulations of MiFID 2]] — our advice is just don’t go there — but you just never know. | '''{{euaprov|Cash Settlement}}''': Trick question. There ''is'' no provision for cash-settlement under the ISDA Emissions Annex. Will that stop counterparties asking you to specify a settlement method? Probably not. Does it matter? Also probably not. What if you ''want'' a cash settlement option? Not out of the ballpark — ones eligibility for EMIR, and as such hedge exempotions, might depend on whether the forward is cash settlable, in theory, or not. There is no good reason for this: it springs from the paranoid brow of those toiler legal counsel who trying to parse the [[De minimis threshold test|eligibility or Emissions derivatives under the refitted delegated regulations of MiFID 2]] — our advice is just don’t go there — but you just never know. | ||