For Immediate Release Thursday, December 21, 2006

For More Information, Please Contact:

Scott Marra, ISDA New York, 212-901-6013,


ISDA Publishes U.S. Emissions Allowance Transaction Annex


NEW YORK, Thursday, December 21, 2006 The International Swaps and Derivatives Association (ISDA) today announced publication of the U.S. Emissions Allowance Transaction Annex to the ISDA Master Agreement together with a confirmation template. 


The U.S. Emissions Annex is intended to apply to purchases, sales or exchanges of emissions products on a spot ("Immediately-Delivered Emissions Transaction") or forward basis, and to options to purchase, sell or exchange an emissions product. Consistent with the structure employed by ISDA in the U.S. Power and Gas Annexes, the new publication is an annex to the ISDA Master Agreement Schedule.  The Annex was developed to standardize terms and increase efficiency in the growing U.S. emissions trading market, to allow market participants to enter into physical emissions transactions, other physical commodity transactions and financial derivatives under one agreement and to enable these contracts to be netted out under the netting provisions of the ISDA Master Agreement in an event of default.


Emissions products covered by the Annex include Carbon Financial Instruments (CFIs) traded on the Chicago Climate Exchange ("CCX Emissions Product"); emissions of nitrogen oxide ("NOx Emissions Product"); emissions of sulfur dioxide ("SO2 Emissions Product") and any emissions allowance or credit created under a U.S. state cap-and-trade program ("State Emissions Product").  The emissions products covered by the Annex are set forth in a Definitions Exhibit designed to be updated as new emissions products, such as renewable energy credits, gain liquidity in the market. As with other commodity specific ISDA annexes, the U.S. Emissions Annex will enable market participants to enter into physical emissions transactions as well as financial derivative transactions under one master agreement with one set of collateral terms.

In September 2006, ISDA published Version 3 of the ISDA EU Emissions Transaction Document, which among other things, adds provisions for financially and physically settled options and forwards. The document is intended for use in privately negotiated transactions in EU emissions allowances and can be adopted as part of a Schedule to an ISDA Master Agreement.


About ISDA

ISDA, which represents participants in the privately negotiated derivatives industry, is the largest global financial trade association, by number of member firms. ISDA was chartered in 1985, and today has over 750 member institutions from 52 countries on six continents. These members include most of the world's major institutions that deal in privately negotiated derivatives, as well as many of the businesses, governmental entities and other end users that rely on over-the-counter derivatives to manage efficiently the financial market risks inherent in their core economic activities. Information about ISDA and its activities is available on the Association's web site:


ISDA is a registered trademark of the International Swaps & Derivatives Association, Inc.