|EUAs and CERs as a security - What about creditors rights|
|Sunday, 04 October 2009 18:41|
Page 3 of 4
What about creditors rights
It is clear, that EUAs and CERs have some features making them to be able to be subject to security rights - given its intangibility, transferability, and economic value.
It follows also from registry provisions, that the protection of the creditor rights in that regard cannot be efficiently guaranteed in the common market now.
The solution adopted by the ICE Clear Europe (fiduciary transfer) is probably the only one, which is safe for the creditor. But it poses however significant risks for the debtor, who entirely loses possession of allowances.
The above considered report shows also another alternative in that regard: the creation of a common account accessible only to both parties jointly. According to the said review: “Allowances given as security would be transferred to this account and remain there for the term of the arrangement.” A separate contract is needed to specify the terms of the arrangement. The advantage of this approach – in comparison to the mentioned above - is that the transferor is left with some degree of control over the allowances given as security.
So, as follows from the whole of the above considerations, there are significant uncertainties as regards the protection of property rights attached to allowances.
Let’s see what are the particulars of the proposition of the ICE Clear Europe in the matter.