Template:M summ EUA Annex (d)(i)(5)(D): Difference between revisions

A curiosity to which the [[JC]] has not yet found a plausible answer is why there is a [[Cost of Carry Amount - Emissions Annex Provision|Cost of Carry]] adjustment for {{euaprov|Suspension Event}}s that run over the scheduled {{euaprov|Delivery Date}}, but not for other, ordinary {{euaprov|Settlement Disruption Event}}s (or for that matter, [[Failure to Deliver - Emissions Annex Provision|Failures to Deliver]]).

Also, the “[[then I woke up and it was all a dream]]” method of resolving irreconcilable suspensions. Unlike for {{euaprov|Settlement Disruption Event}}, ISDA’s [[Carbon Squad]] did ''not'' provide for “Payment on Termination for Suspension Event”. We are baffled by this, as we have mentioned elsewhere: it defaults the position to one where the person who thought they had sold forward a risk finds, for reasons entirely beyond their control, that not only was that  risk transfer ineffective, but the risk has come about and the asset is, effectively worth zero. If you consider the position of someone who was, for example, financing someone else’s {{euaprov|Allowance}} allocation — hardly out of the question, since that is basically the point of a {{euaprov|Forward Purchase Transaction}} this is transparently the wrong outcome, since the Seller — the person who is borrowing against its Allowances — gets to keep the money. Madness.