UK Parliament
UK Emissions Trading Scheme – new statutory instruments laid before Parliament – 21 and 22 April 2021
Two statutory instruments have been laid before Parliament, along with explanatory memoranda:
- The Recognised Auction Platforms (Amendment and Miscellaneous Provisions) Regulations 2021 - These Regulations have been made under section 8 of the European Union (Withdrawal) Act 2018 and are part of the process for creating a UK Emissions Trading Scheme (ETS) and accompanying emissions allowance market. They amend financial services law to reflect the fact that the UK is no longer part of the EU ETS but has now established the UK ETS.
- The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021 – These Regulations make provision for the auctioning of emissions allowances to emit one tonne of carbon dioxide equivalent under the UK ETS and introduce mechanisms to support market stability in this new scheme.
These statutory instruments come into force on 22 April 2021.
The Recognised Auction Platforms (Amendment and Miscellaneous Provisions) Regulations 2021
Explanatory memorandum
The Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021
Explanatory memorandum
International Swaps and Derivatives Association
UCITS – Trade associations publish joint letter on use of EEA UCITS as collateral under UK EMIR – 20 April 2021
The International Swaps and Derivatives Association (ISDA) and the Alternative Investment Management Association (AIMA), in conjunction with several other trade associations (the Trade Associations), have published a joint letter addressed to the Bank of England (BoE), HM Treasury and the FCA about EEA Undertakings for the Collective Investment in Transferable Securities (UCITS) and collateral.
The UK onshored version of Commission Delegated Regulation (EU) 2016/2251, which contains binding technical standards (BTS) on uncleared margin requirements, restricts financial counterparties to using UK UCITS for initial margin purposes. However, the impact of the ‘standstill’ approach adopted under the UK rules means that UK counterparties do not have to adapt current procedures and arrangements for exchange of margin in uncleared derivatives business until 31 March 2022.
The Trade Associations expressed concern that once the restriction on the use of UK UCITS as initial margin is in effect, negative consequences are likely to result for the counterparties concerned and for the attractiveness of the UK as a jurisdiction in which to do uncleared derivatives business. For example, the letter highlights the fact that the pool of EEA UCITS is much larger than the pool of UK UCITS, as the vast majority of surveyed funds managed by their members were domiciled in Luxembourg or Ireland.
The Trade Associations observe that the PRA is currently consulting on amendments to the BTS on uncleared margin requirements, and urges the PRA to take the opportunity to expand the eligibility criteria in the BTS to include EEA UCITS.
Joint Trade Association letter on the use of EEA UCITS as collateral in UK rules on collateralisation
Webpage
