Implications of the FRTB for Carbon Certificates: A Global Perspective

The Fundamental Review of the Trading Book (FRTB) includes higher capital charges for carbon trading under the standardized approach to market risk, which has implications for banks in their role as intermediaries in the emissions trading system (ETS).

In an earlier paper, ISDA investigated whether the regulatory treatment of carbon credit trading under the FRTB is justified by focusing on the EU ETS. The appropriate treatment is important as overly stringent capital requirements would impair the functioning of the carbon market and hamper the willingness of firms to invest in the transformation to a green economy.

This paper extends the findings by investigating the risk of carbon certificate trading in two North American markets – the Western Climate Initiative and the Regional Greenhouse Gas Initiative – as well as the UK’s ETS.

Documents (1) for Implications of the FRTB for Carbon Certificates: A Global Perspective

ISDA Presents Lock-Up Agreement Proposal

ISDA is pleased to present the proposed Lock-Up Agreements and CDS – Proposed Auction Solution. “Lock-Up Agreements” are market-wide arrangements, broadly standardized and predominantly integrated with court sanctioned restructuring or bankruptcy processes. Numerous end users will sign material Lock-Up Agreements...

Key Trends in OTC Derivatives Market H2 2024

The latest data from the Bank for International Settlements (BIS) over-the-counter (OTC) derivatives statistics shows a modest increase in notional outstanding during the second half of 2024 compared to the same period in 2023. Notional outstanding for interest rate, foreign...