IETA Press Release - Geneva, Switzerland, January 12, 2005 Geneva, Switzerland, January 12, 2005 – The International Emissions Trading Association (IETA) has published Guidelines for the creation of a reference price index for EU emissions allowance (EUA) Trading. The Guidelines have been developed: to help build liquidity in the developing EUA market; enhance confidence in the reference price information available; standardise the new commodity; and create a reference price for use as a benchmark for OTC (Over The Counter) derivatives deals and for accounting purposes.
Download the Guidelines here
The Guidelines were developed during 2004 by IETA’s Price Index Working Group, preceding the launch of the EU Emissions Trading Scheme on January 1, 2005. The Working Group, which includes members from exchanges, market information providers, industrial companies, brokers, law firms, traders and merchant banks, recognised the pressing need for credible and reliable Reference Price Indices. The Guidelines developed by the Working Group offer a best practice benchmark on how to collect, verify and report price information. The recommendations cover:
· Index composition;
· Calculation Methodology;
· The role of the Index Complier; and
· The Publication and distribution of the index.
IETA encourages the use of the Guidelines by any party seeking to develop a Reference Price Index for the EUA market. The Guidelines have been specifically developed for the current stage of development of the EU emissions allowance markets and will be monitored by IETA and, following recommendations from the Price Index Working Group, will be updated from time-to-time to reflect market developments.
"Financial trades are the next logical step for the EU Allowance market; these require a credible and reliable reference price index. The Guidelines developed by IETA will give a welcome boost to the establishment of indices and thus financial trades which will enhance the rapidly growing EU emissions market", says Louis Redshaw, Head of Environmental Markets at Barclays Capital.
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