Template:M summ EUA Annex (d)(ii): Difference between revisions

[[Failure to Deliver - Emissions Annex Provision|This]] one is sure to have those with a liberal arts education clutching at their breasts, if not outright pleading for mercy — but one thing we can say is this is a delivery failure that doesn’t arise through caprice of governments, regulators, market dislocation, or the overwhelming lack political will to care less about carbon emissions any more. This is where the Seller has, to put it bluntly, stuffed up.

Now you might say — and you would be right — that it is typical in the equities market to disapply Failure to Deliver as an Event of Default — this happens in the {{gmsla}} and the {{eqdefs}} — but there the theory is, look, the settlement market for equities is notoriously failure prone; that ninety-nine times out of a hundred a failure has nothing to do with the counterparty, and if the counterparty has blown up there will be other indications of that (failure to post margin, failures to pay under other contracts, [[cross default]] and so on. So perhaps that applies here too?

Well, yes — except that the [[Carbon Squad]] has busily drawn out and separately dealt with the sorts of things that cause many settlement failures: Suspension Events and Settlement Disruption Events. What we are left with, beyond credit implosion, is upstream counterparty failure and operational error. The EUA market hardly being the liquid morass that is the equities market there aren’t as many settlement chains and operational failure — okay, but in this age of chatbots and smart contracts you would like to think as futuristic a market as the EU ETS wouldn’t tolerate this kind of thing, either.