| Originating department: | Commercial Services |
| Company Circular No: | LCH.Clearnet Ltd Circular No 2477 |
| Service Circular No: | LCH EnClear No 255 |
| Date: | 15 June 2009 |
| To: | All LCH EnClear Clearing Members |
Launch of LCH EnClear OTC Clearing Service for Spot EUA and CER Emission Contracts
Further to circular EnClear No 2248, dated 6 April 2009, members are advised that the go-live date for the new EUA and CER spot emission contracts will be 3rd July 2009.
Members are further advised that delivery and settlement of the above mentioned contracts will now be undertaken by LCH.Clearnet using its Holding Account at the UK Emissions Trading Registry: GB-121-892-0
ECS Contract Codes
The contracts will be cleared using the ECS system.
| Contract | Contract Code |
| EUA Forward | EUS |
| CER Forward | CES |
Clearing Fees
Clearing fees for the new EUA and CER spot emission contracts will be €8.00 per contract (1000t). Delivery fees will not be charged.
LCH.Clearnet Rulebook
Amendments and additions to the LCH.Clearnet Ltd Rulebook (General Regulations, Default Rules Settlement Finality Regulations and Procedures) for these contracts will be available on LCH.Clearnet Ltd website in due course http://www.lchclearnet.com.
Contract Specifications
| EUA Spot Contract - Basic Terms | |
| Description | Physically settled day ahead spot contract for the delivery of EU Allowances issued in accordance with the terms of Directive 1003/87/EC. |
| Lot size | One lot is equal to 1000 EU Allowance units. A unit being the right to emit 1 tonne of CO2 equivalent. |
| Minimum Contract Size | One Lot |
| Currency | Euros (€) |
| Minimum Tick Size | One Euro cent per tonne, €0.01/tonne |
| Settlement Price | LEBA spot EUA closing price or such or other price as may be prescribed by LCH.Clearnet from time to time. |
| Contract Series | Rolling day ahead spot contract for business days only. Contracts for Monday delivery are made available for trading on the Friday prior to delivery. |
Expiry Day | Contracts will expire at 17:00 on the trading day. |
| Delivery | Delivery is fulfilled by the transfer of EU Allowances from the Holding Account at a designated Registry of the Seller to the Holding Account of LCH.Clearnet Ltd at the UK Emissions Trading Registry and from there to the Holding Account at the designated Registry of the Buyer. |
| CER Spot Contract - Basic Terms | |
| Description | Physically settled day ahead spot contract for the delivery of Certified Emissions Reductions issued pursuant to Article 12 of the Kyoto Protocol that may be used for determining compliance with emissions limitation commitments in accordance with the EU Emissions Trading Scheme. Excluding allowances generated by hydroelectric projects with a generating capacity exceeding 20MW. |
| Lot Size | One lot is equal to 1000 Certified Emission Reductions units. A unit being the right to emit 1 tonne of CO2 equivalent. |
| Minimum Contract Size | One lot |
| Currency | Euros (€) |
| Minimum Tick Size | One Euro cent per tonne, €0.01/tonne |
| Settlement Price | LEBA spot CER closing price or such or other price as may be prescribed by LCH.Clearnet from time to time. |
| Contract Series | Rolling day ahead spot contract for business days only. Contracts for Monday delivery are made available for trading on the Friday prior to delivery. |
| Expiry Day | Contracts will expire at 17:00 on the trading day. |
| Delivery | Delivery is fulfilled by the transfer of Certified Emissions Reductions from the Holding Account at a designated Registry of the Seller to the Holding Account of LCH.Clearnet Ltd at the UK Emissions Trading Registry and from there to the Holding Account at the designated Registry of the Buyer. |
Delivery Timetable
Delivery and settlement of EUA and CER spot emissions contracts will be undertaken by the Clearing House using its Holding Account at the UK Emissions Trading Registry. Delivery will be made on a net margin account basis.
By 19:30 on the trade day the HIT report, Invoice report and Account Sales report will be made available on the Member reporting website;
By 09:00 the day after the trade day Buyers pay full contract value via PPS;
By 11:00 the day after the trade day Sellers must ensure that the necessary transfer of allowances has been made to the Holding account of the Clearing House;
By 13:00 the day after the trade day the Clearing House will transfer allowances to the Holding account of the Buyer. Sellers receive full contract value against the allowances received by the Clearing House.
PPS and Banking Procedures
Standard LCH.Clearnet PPS and banking procedures will apply to these contracts. If you have any queries regarding PPS arrangements please contact;
Siobhan White on +44 (0)20 7426 7044 or siobhan.white@lchclearnet.com
Clearing Member Participation
Clearing of OTC CER and EUA contracts is open to any member approved by the Clearing House to clear trades originating from an Approved Emissions Broker. Those members who are currently not so approved and who wish to participate in clearing should contact the LCH.Clearnet Ltd Membership department - Membership@lchclearnet.com
Questions relating to the topics covered in this circular should be directed to the following:
| General | Isabella Kurek-Simth | +44 (0)207 426 7460 |
| General | Jason LaBrooy | +44 (0)207 426 6323 |
| Membership and Training | Lisa Wager | +44 (0)207 426 7063 |
| Risk | Matthew Wade | +44 (0)207 426 7659 |
| Operational | Kevin Watts | +44 (0)207 426 7699 |
If you have any questions relating to this circular, please do not hesitate to contact me on +44 207 426 7460 or Isabella.kurek-smith@lchclearnet.com
Yours sincerely
Isabella Kurek-Smith
Director, Head of Energy and Freight Markets
Commercial Services