Market integrity and transparency regime for the EU’s carbon market
IETA Position Paper

June 2010

Key messages

• IETA strongly condemns any forms of market abuse;

• IETA supports appropriate measures for enhancing oversight, transparency and integrity of
the carbon market based on an impact assessment with a thorough cost-benefit analysis;
• Carbon derivatives are mainly traded on central platforms which provide a high level of
transparency and are subject to high levels of financial regulation;
• The Commission’s proposals for regulation of OTC derivatives must not drive out liquidity in
this young and growing market, and must allow for efficient price formation to achieve CO2
emission reductions at the lowest cost;
• IETA supports well-defined, targeted transparency measures for highly bespoke physical
contracts that are traded bilaterally or over-the-counter to support efficient price discovery
and market integrity;
• Transparency rules for the physical carbon market could be embedded into the work on
market integrity and transparency of physical power and gas markets;
• IETA looks forward to discussing with the Commission the appropriate scope of the MiFID
review which should ensure that the same market participants benefit from an appropriate
level of regulatory protection in order to safeguard their interests and the integrity of the
market in general;
• An EU-wide carbon market monitoring function should be introduced within existing EU
regulatory structures to allow data exchange and coordination among national regulators
while the power of investigation would remain at national level;
• It should be clarified that all oversight rules applying to EUA should apply also to secondary
market transactions on CER/ERU or other instruments that would become tradable in the
EU ETS under future arrangements.

P a g e  |  1   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT  

  Rue  de  la  Loi  235,  Boite  27  
1040  Brussels,  Belgium  
+  32  (0)  2  230  11  60;  brussels@ieta.org    
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
Introduction

This paper outlines the International Emissions Trading Association (IETA)’s view on various
initiatives concerning regulation and oversight of the EU’s carbon emissions market (EU ETS)1.

IETA is the leading voice of the international business community on the subject of
emissions trading. IETA supports efforts to address the pressing environmental
challenge of climate change, and is dedicated to the establishment of environmentally
effective market-based emissions trading systems that generate reductions at least cost
to the community.

There is only one regulatory initiative2 which will directly address carbon market oversight in the
EU, but regulatory developments in financial and commodity derivatives markets will also have
implications for carbon market participants.

IETA welcomes the initiation on 17 December 2009 of a series of stakeholder consultations by

the Commission on commodity derivatives and asks for further clarity concerning how carbon
products will be included in the following regulatory initiatives:
- Review of the Market Abuse Directive (MAD);
- Enhancement of regulatory framework for over-the-counter (OTC) derivatives;
- Enhancement of trade and price transparency in the Market in Financial Instruments
Directive (MiFID);
- Review of exemptions from MiFID for commodity firms;
- Possibility to empower regulators to set position limits;
- Proposal for EU level oversight of electricity and gas forward physical and spot markets,
which might include carbon emissions, with regard to market integrity and transparency.3

IETA urges the Commission to ensure that the carbon market and its products are not subject to
unnecessary regulatory overlaps. Stakeholder consultation by all Directorate Generals is
essential to ensure coherence and reduce costly and confusing duplication. The design and
implementation of any regulatory framework must follow the “better-regulation principle” and
must be founded on sound market failure and cost benefit analysis to ensure the
competitiveness of EU industry.

IETA welcome the Commission’s recognition in its 2009 Communication on derivatives4 that
different solutions might be needed for different asset classes. It is critical that the Commission
takes account of the diverse range of assets and participants (compliers, traders, investors) it
intends to cover. To prevent unintended consequences, regulatory solutions must not be
applied uniformly to all asset classes without prior analysis of the market characteristics of each
asset.

                                                                                                               
1
A glossary is annexed to the paper, for clarification of different concepts used.
2
According to article 12(1a) of Directive 2003/87/EC, the European Commission is to examine by end-2010 whether
the EU’s emission trading scheme is sufficiently protected from insider dealing and market manipulation and bring
forward regulation to ensure it.
3   IETA will submit a separate reply to the consultation published by DG Energy on 31 May on ‘Initiative for the

integrity of traded energy markets’.  

4
COM(2009) 563/4 ‘Ensuring efficient, safe and sound derivatives markets: Future policy actions’
P a g e  |  2   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
As a first step, one must distinguish between physically settled spot/forward and derivatives
markets. Derivatives of carbon allowances traded on exchanges and OTC5 are largely
regulated.

IETA supports the introduction of targeted regulatory measures for trading of physical
spot/forward carbon emission allowances6 that complement the efficient operation of deep,
liquid and competitive markets. A consistent and proportionate regulatory framework will attract
participation, reward innovation, and enhance environmental efficiency.

IETA also emphasizes the need for EU regulators to co-ordinate with each other, to establish
harmonized transparency standards, definitions and reporting for the pan-European carbon
market and for cross-border cooperation in detecting fraudulent activity.

In this context, IETA welcomes the adoption of amendments to the registry regulation in the
climate change committee of February 2010. The fast-track implementation of security features
and the introduction of a single EU registry for phase III will make it far more difficult to fraud the
system and abuses will be more easily detected and can be faster dismantled.

What are carbon emission allowances?

A carbon emission allowance is a unit which grants the holder the right to emit one tonne of
carbon dioxide equivalent during a specified period, which shall be valid only for the purposes of
meeting the requirements of the EU Emissions Trading Directive. Carbon emission allowances
are traded pre-dominantly for compliance usage.

IETA notes that there are substantial interdependencies between European emission
allowances markets and some other energy markets (mainly electricity and gas) since there are
linkages in the price formation processes of these markets.

(1) Spot deals

Emission allowances7 can be sold in spot markets where delivery is scheduled to be made
within two trading days or another generally accepted standard delivery period. Spot trading of
emission allowances is currently not subject to any specific EU legislation8. Spot contracts are
explicitly excluded from the scope of MiFID.9

                                                                                                               
5
OTC options, futures, swaps and other derivative contracts relating to emissions allowances are regulated under
MiFID if they can be settled in cash.
6
Here we only address the trading of spot allowances in the ‘secondary market’ but the forthcoming regulation on
auctioning of EU allowances for phase III should address the risk of market manipulation in the ‘primary market’.
7
For the avoidance of doubt, the reference to allowances is a reference to EU Allowances (EUAs), Certified Emission
Reductions (CERs), Emission Reduction Units (ERUs) and any other compliance unit.
8
Romania has recently reclassified spot EUAs as financial instruments (23/02/2010). IETA does not believe that a
blunt unilateral reclassification is the right way to regulate the carbon market. IETA supports the call by the French
government’s Prada report for a harmonization of the legal status of emission allowances and uniform application of
tax/accounting rules across the EU.
9
Art 38 of MiFID Implementing Regulation. Moreover, MiFID earmarks energy as a "commodity" while carbon credits
are not mentioned. It is, however, not very plausible that carbon credits would fall within the definition of "commodity"
as this excludes intangible rights and goods, while explicitly including energy.
P a g e  |  3   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
(2) Physically settled OTC forward deals

Contracts are written based on the price and character of emission allowances. These can
mirror the underlying behaviour of the allowances and depending on the detailed terms of the
contract, they have to be satisfied by the delivery of emission allowances or through a cash
settlement process. A physical carbon contract is traded via bilateral bespoke contracts (over-
the-counter). Physical OTC forwards are non-financial instruments and not covered by MiFID.

(3) Cash-settled carbon derivatives

Several types of derivative contracts (e.g. forwards, futures, options and swaps that are traded
on a regulated exchange or an MTF…) relating to emission allowances fall within the scope of
MiFID if they ‘are settled in cash or may be settled in cash at the option of one of the parties’
(MiFID, Section C(10) of Annex I). Carbon derivatives listed on exchanges (also if physically
settled) are under the full scope of MiFID and harmonised throughout the EU. Consequently, no
further rules are necessary for these markets.

Clarification is required to whether the criteria for classification of carbon derivatives as financial
instrument within MiFID cover all type of credits (EUAs, CERs, ERUs, etc.). MiFID only
mentions derivative contracts relating to "emission allowances", but it is unclear whether this
only relates to EUAs, or to other carbon credits as well (CERs, ERUs, or even VERs). There
seems no reason why EUA derivative contracts would be treated differently from derivatives
relating to other tradable carbon credits, but regulatory clarification on this issue would be
appreciated.

The first section of this paper addresses market transparency and supervision for both
spot/physical forward and derivative carbon markets. The second section looks at the regulatory
coverage for OTC/derivatives carbon markets. The third section brings forward
recommendations to adequately regulate the spot/physical forward carbon market.

Section I Transparency and market supervision

1. IETA believes it is important to distinguish between data that may be collected and publicly
disclosed and data that may be collected and reported to regulators by data owners/market
participants, e.g. traders, electricity generators.

I.1 Fundamental data transparency

2. IETA recognizes a need to increase the availability of ‘fundamental’ emissions data

collected by Member States to allow market participants to make informed trading decisions:
- Providing more frequent and, at least, quarterly estimation of aggregate emissions (by
sector and by country) in the system will enhance the efficiency of the ETS and
confidence in the system. These estimates should rely on reporting of emissions data
produced using simplified methodologies by installations/operators. While these

P a g e  |  4   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
estimates would not be audited (as opposed to annual verified emissions) operators
should be accountable for the information they report (subject to ‘best possible efforts’).
- These figures should be published alongside energy usage and sectoral GDP.
- They should be published within a timescale that is agreed between the Member States
to be reasonable and which is policed by the Commission.
- We further believe that all Governments should publish their latest projections for
national emissions by sector for 5 future years and for the last year of the EU-ETS
Phase where that is later. Release of this data, upon request, is already a requirement
for Member States under Directive 2003/4/EC.
- The Commission should assemble data from all Member States and publish a
compendium at least annually.

3. DG Energy and CESR/ERGEG might usefully consider whether to include emissions in their
work on fundamental data transparency in relation to power and gas markets, while taking
into account differences.

4. It is important that information is released in a consistent, orderly and timely manner. Data
releases should be made more frequently; this would build confidence in the market. The
quality of the market and its development is at risk if information is not accurate. Also,
information has to be accessible and data presented in a consistent and homogeneous
manner.

I.2 Pre-/Post-trade transparency

5. A balance has to be stuck to avoid disproportionate or ill-conceived transparency

requirements that negatively impact liquidity in what is still a young and growing market.

6. IETA supports appropriate disclosure of trades and positions to regulators to ensure they
possess the relevant information necessary for them to discharge their regulatory functions.
IETA believes that public disclosure of trade data by individual market participants (e.g.
installations) should be avoided as it could expose individual trading patterns if anonymity is
not preserved.

7. Consideration might be given to the role trade repositories10 can play in the collection and
provision/publication of aggregate post-trade data while guaranteeing anonymity to market
participants; ideally this data should then be provided by the trading platforms.

8. Pre-trade data refers to market-relevant information, e.g. liquidity, price level, bid-offer
spread, etc. The level of pre-trade data is generally good in the carbon market due to the
high level of transactions executed on exchanges/via platforms. Whether or not a
transaction should be subject to pre-trade transparency requirements should depend on the
level of standardization, liquidity level, and possibility to trade on platforms (Exchange, MTF,
Broker) and/or clearing.

                                                                                                               
10
A trade repository is a centralized database. It allows compliance with transparency requirements through a single
reporting flow. The trade repository would be accessible for regulators subject to confidentiality requirements.
Reporting could also take place at a consolidated level through exchanges, brokers or MTFs.
P a g e  |  5   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

9. Exchanges/MTFs publish pre-trade information (i.e. bids/offers) for instruments traded on

their platform. It should be ensured that pre-trade transparency requirements could not
negate the anonymity that exchange trading provides exposing participants trading
arbitrages.

10. IETA understands that the Commission is investigating these issues on a broader level with
its initiatives aimed at enhancing the resilience of OTC derivatives market following the
financial market crisis. IETA encourages the Commission to launch thorough impact
assessments to weigh potential advantages (i.e. price discovery) and disadvantages (i.e.
market development and effectiveness of risk management actions).

11. In terms of current market transparency on trades, information is readily available via the
platforms themselves or via data vendors/publishers.

12. Anonymised, delayed data (published reasonably close to ‘real time’) about the occurrence
and volume of all transactions executed in an electronic trading system (e.g. on
exchanges/MTF) would provide reliable price information on liquid standardized (and
therefore relevant) contracts while preserving liquidity. It would also help all parties gain a
better understanding of market evolution and key trends.

13. The publication of pure bilateral transactions post-trade raises challenging questions as to
the value of such information. Bilateral bespoke transactions are normally highly
bespoke/tailored in their nature. The relevance therefore to the price discovery process of
any information contained in such disclosures is likely to be of limited relevance. There are
also significant practical difficulties associated with making such information public whilst
maintaining confidentiality.

I.3 Supervisory regime

14. An EU-wide carbon market monitoring function, allowing for an effective coordination and
exchange of data among national supervisors who would retain power of investigations,
should be introduced within existing EU regulatory structures, e.g. European Securities and
Market Authority (ESMA) or Agency for Cooperation of Energy Regulators (ACER).

15. To prevent conflicts between regulators, it is of outmost importance to avoid overlaps and to
ensure that regulators have appropriate powers to supervise the entire carbon market, e.g.
covering both spot/physical forward and financial derivatives. However, access to relevant
data should be granted on request to all relevant authorities.

16. The rule making process should remain in the hands of the competent sectoral authorities
as the carbon market is defined by an environmental objective.

17. This authority would also have to keep strong ties with the supervision and competition
authorities of the various market sections and of nearby markets, such as power and gas.

P a g e  |  6   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
Section II Oversight of carbon derivatives

II.1 General Comments

1. IETA believes that the general level of oversight of the EU ETS derivatives market is
sufficient but there is scope for targeted measures to prevent market abuse.

2. Emissions derivatives markets were not imminently concerned by the financial crisis.
Markets remained liquid and, apart from a demand-induced price decrease, no adverse
impacts were felt.

3. Fundamental re-casting, amendment or deletion of the exemptions in MiFID could

potentially bring into its scope numbers of industrial companies (including airlines) who use
carbon markets to manage their compliance obligations and other risks inherent to their core
business. It is also important that the same market participants benefit from an appropriate
level of regulatory protection in order to safeguard their interests and the integrity of the
market in general.

4. IETA is aware of uncertainties created by differing national transposition and interpretation

of the definition of financial instrument in relation to derivatives on emissions allowances.
IETA is ready to support the Commission in addressing these issues in the context of the
MiFID review.

II.2 Record keeping and reporting to regulators

5. IETA finds it important that regulators should have access to all relevant information
necessary to fulfill their regulatory obligations.

6. The record keeping obligations in MiFID enable regulators to access all relevant data related
to financial derivatives transactions. IETA believes such an approach provides regulators
with the appropriate supervisory tools whilst limiting additional burden on market players.
This would also be a sensible approach to the regulation of carbon derivatives.

7. The type of information to be reported beyond instruments admitted to trading on a

regulated market needs to carefully considered and determined ex-ante. A balance has to
be struck between providing the regulators with the information needed to undertake its
regulatory task and the cost burden for providing the information. The costs can be reduced
through recourse to a trade repository (cf footnote 10).

8. IETA believes that reporting should be done through the systems of exchanges, MTFs,
brokers and central clearing platforms and, if applicable, by trade repositories; this would be
an efficient and practicable response to the need for regulators to access relevant data
without imposing a significant burden on individual firms.

9. Position reporting can provide a useful tool for regulators in identifying concentrations of risk
in a particular instrument or market. It should be limited to large positions. Once again,
exchanges, MTFs, brokers, CCPs and, if applicable, trade repositories should provide
P a g e  |  7   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
details of position to the regulator and it should be an integrated and harmonized process
delivered to a central data repository.

10. Given the commercially sensitive nature of such information, such data should only be made
available to regulators.

11. IETA is ready to explore further with regulators how such information might be used to
enhance public transparency.

II.3 Market integrity

12. In order to remove uncertainties in the scope of application, IETA strongly supports
alignment of the definition of financial instrument in MAD with that of MiFID. However, this
alignment should not result in the inadvertent expansion of MAD to cover OTC and spot
markets in commodity derivatives and similar products.

13. IETA would like to highlight that all markets need participants who are willing to take the
other side of a trade – whether a physical producer/hedger, bank or index fund. Speculative
interests add depth and liquidity to the market and should not be viewed as detrimental to
market integrity per se.

14. Position limits are a blunt regulatory tool that should not be imported into the EU regulatory
framework. Position limits can hinder the ability of producers/manufacturers to hedge
effectively or expose these firms to a detrimental regulatory risk (risk that regulators will set
position limits) and commercial risk (carbon price risk). Moreover, in the absence of forward
allowance sales by Governments ahead of 2013, position limits could unnaturally limit the
ability of market participants to close the “speculative gap” (which is driven by real hedging
needs and not by speculative aims) built between advanced hedging demand for allowances
from 2010 onwards and the subsequent spot sales of allowances several years hence from
2012 at the earliest.

15. Power producers and other industrial firms are naturally short with CO2 and have to
participate in the CO2 market for compliance reasons. They are hedgers of commodity risk
and have by definition important CO2 positions. Position limits would seriously limit their
ability to hedge the CO2 risk.

16. For emerging markets with limited initial liquidity, it is normal that market-makers, acting in
their role, build positions that can accrue to a significant extent of overall open interests
(e.g., in the carbon market, for quarterly contracts like March, June, September). Imposing a
priori a position limit on all contracts could thus be detrimental to liquidity and thus market
development. The position reporting should allow the regulator to fully investigate the
reasons for an important position, and require it to be scaled down if needed.

P a g e  |  8   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
Section III Oversight of physical spot/OTC forward markets

III.1 General Comments

1. The large majority of trade in the EU ETS physically settled spot and OTC forward market
takes place for compliance purposes.

2. There could be some improvement in the physical spot/OTC forward markets, which is
currently not covered by MiFID regulation. As discussed in section 1 above there is room for
improvements in regards to post-trade transparency. Moreover, transactions are not
covered by a market abuse regime as for financial markets and it is possible for unregulated
entities to operate on behalf of third parties. However, simply extending MiFID or MAD to
cover non-regulated physical markets is not the right approach.

3. Yet, customers should be protected whether they are served by financial institutions or other
intermediaries, hence some form of regulation should be there to cover the entities that are
currently not regulated.

4. IETA believes that market integrity rules could be integrated in the tailor made regime being
discussed for wholesale electricity and gas trading, as one of the option suggested also by
ERGEG-CESR in their advice to the Commission11. It is of outmost important that this does
not fragment the supervisory regime for the carbon market.

5. Targeted exemptions from regulatory requirements might be justified for operators which are
intervening on the market only for achieving their EU-ETS compliance obligation. This is
justified by the fact that they present no significant risks to clients' protection and that they
could have no operational set up to manage certain regulatory requirements at a reasonable
cost.

III.2 Record keeping and reporting to regulators

6. IETA strongly believes regulators should have access to all relevant information necessary
to fulfill their regulatory/supervisory obligations.

7. All transfers of allowances are tracked by the registries system, which can also be
monitored for suspicious behaviour. Data should be available for competent authorities on
request. However, registries do not capture price information/information on open interest on
forward contracts. This information could be collected through a trade repository.

8. It is important that regulators have the necessary powers to request relevant information
from individual market participants. However, appropriate safeguards must be included so
as to prevent or guard against so-called ‘Phishing expeditions’.

                                                                                                               
11
“CESR and ERGEG advice to the European Commission in the context of the Third Energy Package – Response
to Question F.20 – Market Abuse” (Ref: CESR/08-739 and E08-FIS-07-04)
P a g e  |  9   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
9. Transactional and hedging information is at the core of many companies’ risk management
strategies. Physical OTC carbon hedges are often large, strategic and by nature tailor-
made. Publication of detailed non-aggregated information on trades concluded may pose
serious confidentiality questions and thus should be carefully evaluated.

10. IETA also notes that the Commission should be mindful of the varied capacity different
carbon market actors have for tracking and storing data. In this sense a fine balance
between costs and benefits should be assessed. Investment firms, currently required by
MiFID to keep record of all transactions, already have this competency. Much of the energy
sector also has capacity to record transactional data. However, many other compliers,
including many of the energy-intensive industries and small compliers, have different needs
and limited capacity to track and collect data.

III.3 Market integrity

11. IETA acknowledges recent concerns surrounding the integrity of the emissions market
arising as a result of the VAT carousel fraud. While, this is indeed a tax-related issue that
has occurred in other sectors of high-value goods (e.g. mobile phones, computer chips,
etc.), it has also demonstrated weaknesses in the regulatory regime for the carbon market.

12. Given the nature of the market, we highlight the need to avoid overlaps to safeguard against
abusive or manipulative behaviour. In particular, IETA believes that prevention of market
manipulation should be addressed within an appropriately defined Market Abuse framework.
Afterwards, if an abuse of market dominance is being detected, anti-trust laws and
competition authorities should be responsible.

P a g e  |  10   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org  
 
 IETA  position  on  transparency  and  oversight  in  the  
EU’s  carbon  market  
  January  19,  2011  

 
Glossary

- Oversight: regulatory and supervisory framework aiming at protecting market integrity, i.e.
prevent opacity or disruption through illicit behaviour.
- Supervision: checking of compliance of market participants with regulatory framework.
Punitive measures are taken if rules are not respected.
- Monitoring: similar to supervision but without possibility for punitive actions in case of non-
compliance.
- Regulation: set of legally binding rules that set the framework conditions for certain
activities. Example: Market in Financial Instruments Directive (MiFID) – regulates financial
instruments and activities related thereto.
- Supervisory body: legal entity with remit to investigate market abuses on behalf of the
government.
- Market abuse: The EU’s Market Abuse Directive aims to ensure that behaviour such as
insider dealing and market manipulation is properly deterred and sanctioned. In this paper,
‘market abuse’ also covers fraudulent behaviour more broadly, e.g. VAT fraud.
- Market manipulation: describes a deliberate attempt to interfere with the free and fair
operation of the market and create artificial, false or misleading appearances with respect to
the price of, or market for, a security, commodity or currency.
- Insider trading: trading of a company’s securities (e.g. bonds or stock options) by individuals
with potential access to non-public information about the company.
- Commodity: any goods of a fungible nature that are capable of being delivered, including
metals and their ores and alloys, agricultural products, and energy such as electricity.
- Transparency and its different components:
- Fundamental: publication of data which defines a market in terms of demand/supply,
e.g. CO2 emissions in the case of the carbon market, commodity production in the
case of commodity markets, etc.
- Pre-trade: publication of data which precedes a trade, e.g. bids and offers.
- Post-trade: publication of data which is the result of a trade, e.g. price, volume and
time of trades.
- Trade repository: centralized database which allows to comply with transparency
requirements through a single reporting flow.
- Multilateral trading facility (MTF): a multilateral system which brings together multiple third-
party buying and selling interests in a way that results in a contract.

P a g e  |  11   IETA  –  MAKING  MARKETS  WORK  FOR  THE  ENVIRONMENT   January  19,  2011  
Geneva  –  Washington  –  Brussels  –  Toronto  
www.ieta.org