On July 23, ISDA published a new paper, Implications of the FRTB for Carbon Certificates, which explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The FRTB would result in higher capital charges for carbon trading under the standardized approach to market risk, which could impair the ability of banks to act as intermediaries in the emissions trading system market globally, hampering a key tool for policy-makers to ensure a cost-effective transition to a carbon-neutral economy.
This paper was developed by ISDA’s ESG Risk and Capital working group and provides a detailed analysis of how the FRTB would impact on carbon certificates. The analysis, which is supported by market data, suggests the risk weight for carbon certificates should be reduced from 60% to 37% and the tenor correlation parameter should be increased from 0.99 to 0.995-0.999.
Documents (1) for Implications of the FRTB for Carbon Certificates
Latest
ISDA, FIA and SIFMA Letter on Sunset of Swaps LTR Rules (Part 20)
On May 20, 2026, ISDA, FIA and SIFMA submitted a joint letter to U.S. Commodity Futures Trading Commission (CFTC) to request the CFTC to sunset large trader reporting rules (LTR) rules for physical commodity swaps pursuant to Regulation 20.9.
ISDA-SIFMA Letter – CFTC-SEC Harmonization
On May 19, 2026, ISDA and SIFMA submitted a joint letter to the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on SEC and CFTC harmonization, as part of the agencies’ Joint Harmonization Initiative which...
ISDA AGM Studio: Jim Byrd, RBC Capital Markets
Jim Byrd, global head, macro products, at RBC Capital Markets, joins the ISDA AGM studio to discuss the main risks and opportunities in the current trading environment and what needs to be done to avoid liquidity squeezes during periods of...
ISDA AGM Studio: Michelle Beck, FCA
Michelle Beck, director for wholesale buy‑side oversight at the Financial Conduct Authority, speaks with ISDA’s global head of public policy, Steven Kennedy, about the regulatory approach to systemic risk in non‑bank financial intermediation after a panel discussion on how robust...