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Here is the JC’s latest [[Anatomy]]{{tm}}: [[ISDA]]’s emissions annex, which comes in at least two flavours: the original [[EU Emissions Anatomy]], and the new, copycat, we absolutely-are-not-going-through-separation-anxiety, [[UK Emissions Anatomy]]. | Here is the JC’s latest [[Anatomy]]{{tm}}: [[ISDA]]’s emissions annex, which comes in at least two flavours: the original [[EU Emissions Anatomy]], and the new, copycat, we absolutely-are-not-going-through-separation-anxiety, [[UK Emissions Anatomy]]. These documents are special in that they are the creature of that permanently marginalised {{icds}} splinter group, the {{carbonsquad}}. These quasi-fundamentalist drafting weirdos, with all their neo-{{isda92prov|First Method}}, {{tiwu}} nonsense, don't often get a look in, but ISDA seems to have given them free rein here, and they have not wasted the opportunity. But working out which tracts of the annex are dangerous, extremist nonsense and which are practical allocations of risk in a new and [[sui generis]] asset class this is all part of the fun of it, frankly. | ||
Each functions as a sort of add-on to the {{commoddefs}}, which you access by adding a new Part with some elections to the Schedule to your {{isdama}}. This is also some cross-grading into the [[2006 ISDA Definitions]], and you may find yourself | Each functions as a sort of add-on to the {{commoddefs}}, which you access by adding a new Part with some elections to the Schedule to your {{isdama}}. This is also some cross-grading into the [[2006 ISDA Definitions]], and you may find yourself hankering wistfully for the dear old {{eqdefs}} too, if hedging disruption is something that keeps you awake at night. | ||
Now. In our humble opinion, the level of rigour, diligence and just plain old common sense | Now. In our humble opinion, the level of rigour, diligence and just plain old common sense, however pedantically articulated and tediously applied, we have come to expect when beholding a new weapon from the great ISDA FWMD foundries just feels ''missing in action'' for these Emissions Annexes. Oh, fear not: [[pedantry]] and [[tedium]] abound close-up: {{icds}} knows no boundaries when it comes to labouring what ought to be obvious, and they have spared no innocents here. But back off a few feet to beyond a bigger picture — matters of substance, not form — and you may feel {{carbonsquad}} has taken some positions which strike us as being ''eccentric'', were we to put it kindly, and ''utterly barking mad'' were we to be speaking candidly among friends. | ||
Seeing as {{icds}} has now duped the original EU version — the UK version is, as you would expect a very close lift — then the original has acquired some inertia. Change one and you much change both. We doubt there will be much appetite. Pity. We don’t quite understand why ISDA didn’t combine these into a single, generic annex. The amount of divergence needed to cover both regimes is very little, and perhaps it was the opportunity to re-visit the original approach and come up with something that sits a little more comfortably with the usual ISDA approach to valuing and terminating derivative transactions. | |||
Now the blame for some of this miscomprehension may well be laid at the [[JC]]’s door: we read this cold, without the benefit of having seen its evolution, and without much knowledge of the market, much less competing products (the [[International Emissions Trading Association]]’s master agreement, for example). We’ll maybe get on to that. So he may be missing some subtlety. | Now the blame for some of this miscomprehension may well be laid at the [[JC]]’s door: we read this cold, without the benefit of having seen its evolution, and without much knowledge of the market, much less competing products (the [[International Emissions Trading Association]]’s master agreement, for example). We’ll maybe get on to that. So he may be missing some subtlety. | ||
But we don’t think so: those experts to whom we have spoken are all abut shoulder-shruggy about this document, and sort of mumble that we're struck with it, since a couple of key market participants are now quite attached to it. | But we don’t think so: those experts to whom we have spoken are all abut shoulder-shruggy about this document, and sort of mumble that we're struck with it, since a couple of key market participants are now quite attached to it. | ||