Głowacki Law Firm

EUAs and CERs as a security - Proposition of the ICE Clear Europe
Sunday, 04 October 2009 18:41

Proposition of the ICE Clear Europe


According to the said circular, the Clearing House has set a position limit of:


1) 30% of total initial margin requirement, per Clearing Member, in relation to the deposit of Allowances and


2) 5% of total initial margin requirement for CERs.


Allowances and CERs may only be used as a permitted cover in relation to original margin in respect of energy contracts and are subject to a haircut 25%.


Deposits and withdrawals of allowances and CERs must be made in minimum increments of 1,000 allowances.


The allowances and CERs given as a security will be priced daily using the Official Daily Settlement prices for the ICE ECX EUA and ECX CER Daily Futures Contracts respectively.


A transfer must be made to the dedicated holding account of the Clearing House established at the UK Registry. Actual parameters of account are: Account Name: ICE CLEAR COLLATERAL Account ID: GB-121-2108-0


As for above particulars relating to ICE it should be remembered, that they are cited only a general information and any person interested in specific requirements should refer to applicable contract terms of the ICE.


So, this proposition and concept presented by the clearing house bases on fiduciary assignment of allowances, which is – as was said above – the safest possible for the creditor form of security relating to allowances. Consequently, in similar situations everything (in particular, the protection of the rights of the debtor) depends on the agreement. But - unfortunately - agreements with exchanges are hard to negotiate.


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