IMOS - Carbon Allowance Trade

You can use the Carbon Allowance trade type to capture the trade details of Carbon Allowances to track their value against the market, link them to physical contracts, and account for them on your balance sheet.

Carbon Allowance in Trading

The Carbon Allowance contract type will be added to the Trading Profile and Trading P&L Summary - ‘Contract' group. The exposure will roll up to the CO2 exposure fields. Carbon Allowances will always be exposed in the Current period. A Carbon Allowance will only be in exposure when the status is either Confirmed or Invoiced.

Open

View the Carbon Allowance - List

When the flag is enabled, a contract type called Carbon Allowance—List appears under the Trades list in the Trading Module menu.

Open

Once selected, you can view a list of your Carbon Allowance trades.

Create a new Carbon Allowance trade

Once you select Carbon Allowance - List, a blank Carbon Allowance Trade form is available for data capture.

You can capture the following information on the form.

1. Type: (defaults to ‘EU Allowance')

2. Buy/Sell - "Buy“ or "Sell“

3. Trade Date - date field to capture the date the trade was made

4. Trade ID - system generated

5. Symbol - dropdown of commodity symbols marked as "carbon“

6. Status - select either Pending or Confirmed from the dropdown list

7. Price - price in the base currency of the trade

8. Curr - available currencies

9. Exch. Rate - number pulled from the latest exchange rate for the currency selected and system base currency; can be overridden

10. Quantity - quantity of the trade

11. Counterparty

12. Clearinghouse

13. Company

14. LOB

15. Department

16. Trader

17. Trade Area

18. Vessel Type

19. Strategy

20. Ref Contract

21. Reference

22. Broker Conf No

23. Broker Commission Table:

    1. Broker - available brokers in the address book

    2. Type - P - Percentage, R - Rate, L - Lumpsum

    3. Rate/Lump - the value associated with the corresponding commission type

    4. Payment - On Execution

24. Face Value (Base) - the calculated value of the trade ((amount * price) * exchange rate)

25. Commission - calculated commission amount

26. Remarks - free text field to capture notes

Carbon Allowance trade form options

On the Carbon Allowance trade form, you also have the following options:

• Plus Sign - add a new trade

• Magnifying Glass - search for existing trades

  • Opens a separate input form with the following fields:

  • When more than one trade meets the search criteria, another form shows the matching trades to select from:

• Save - save the trade with the latest information in the form

• Blank page - clear the details in that trade form

• Copy - create copies of the trades

• Delete - delete the trade

• Attachment - open the attachment form and allow for attaching a file or links to the trade

Bulk Confirm Trades

The Carbon Allowance List supports Bulk Confirm Trade(s) logic. The system will mark the trades as confirmed and add a broker confirmation number if one does not already exist.

Carbon Allowances in Trade Details List

In the Trade Details List, this Carbon Allowance contract will show the following fields:

1. ID - Trade ID

2. Short/Long - Buy/Sell

3. Contract Type - Carbon Allowance

4. Counterparty - Counterparty

5. Start Date - Always Today()

6. End Date - Always Today(+1)

7. CO2 Tons - Contract Quantity

8. CO2 Price - Contract Price

9. CO2 Market - from the Trading Profile

10. CO2 Price Source - for the market rate (ie the period the price is for)

11. CO2 Price Basis - for the market rate (ie the date the price was published)

12. CO2 Market Rate - for the period

13. CO2 Exposure - calculated from the CO2 Tons multiplied by the difference between the contract CO2 price and the Market CO2 Price and then converted back to the base rate; ((Market Rate - Contract Rate) * Quantity) * Exchange Rate

14. Net P&L - Same as CO2 Exposure

15. Position Status - ‘Confirmed’

16. P&L Status - ‘Unrealized’

17. Company Code - code of the company on the Allowance

18. Company Name - the name of the company on the Allowance

19. Strategy - Strategy

20. Created By - user ID who created the Allowance

21. Created On - timestamp when the Allowance was created in the system

22. Last Modified By - user ID who last changed the Allowance

23. Last Modified On - timestamp when the Allowance was last changed

24. Reference - Reference

25. Trade Area - Trade Area

26. Trade Date - Trade Date

27. Vessel Type - Vessel Type

Invoicing Support for Carbon Allowances

When the configuration flag CFGEnableCO2Exposure is enabled, the Create Invoice button on the Carbon Allowance trade will generate a new invoice form with details populated from the underlying contract. This workflow will be completed after the trade has been booked in the system and the invoice has been received.

• Select Create Invoice on the trade, and the system will generate a Trade Settlement form.

• These Trade Settlements will be shown in the Trade Settlement List

• The Create Settlement link action is available and can be used to create a settlement for these trades

Transferred Carbon Allowances

You can use the Transferred checkbox on the Carbon Allowance form to indicate allowances transferred from a counterparty instead of bought from the market.

Link a Carbon Allowance Sale to a Purchase and include as an Allocation

You can link your Carbon Allowance Sell trades to one or more matching buy trades for cargo or TC contracts.

1. Select Add New Row to choose from the available inventory of specific trades.

2. Select one or more Carbon Allowance trades in the grid to link the total quantity you are selling to previously made purchases.

• The allocation grid auto-populates with details from the buy trade, including the Contract Type, Contract ID, Transferred date, Status, Qty, and Price.

3. Type the quantity you want to link into the Qty field.

A new row is added to the buy contract’s allocation grid when the sell trade is linked to a buy trade. Linking the sell trade to the buy updates the trade's available quantity so it can be correctly linked to other trades or contracts in the system.

• Select a line item and choose View Contract to open the corresponding Carbon Allowance trade (e.g., the sell trade from the buy trade and the buy trade from the sell trade).

• When the sell trade is linked to the buy trade but not settled, the quantity is added to the Pre-Allocated Qty on the buy trade. The Remaining Qty updates accordingly.

• When the sell trade is settled, it moves to the Transferred Qty. The Remaining Qty reflects the remaining inventory for this buy trade.