Identification process for stolen carbon emission rights

Although all national registries have now resumed operation, the problem of stolen certificates is far from solved and is still unsettling carbon traders. Market members are showing caution or avoiding spüot market trading altogether.

greenmarket has therefore developed an identification and security process to prevent  trading with bad titles. Attached you find a two-page description how greenmarket achieves high security standards with our Swiss settlement partner SIX SIS AG.

1. Identification upon receipt of the carbon emission rights

 Upon receiving the emission rights, SIX SIS AG checks the serial numbers of the emission rights against the information available (e.g. the blacklist) to identify any indication of bad credits. If this is the case, the credits are returned immediately to the delivering party. These checks are carried out on a reasonable-effort basis.

This procedure is designed to ensure as effectively as possible that emission rights with blacklisted serial numbers are excluded from the closed greenmarket trading community.

2. Identification in the SIX SIS account

If a problem is identified at a later stage (e.g. where serial numbers are subsequently added to the blacklist) involving credits already held by SIX SIS AG, these credits are returned to the original delivering party and cancelled from the custody account of the SIX SIS participant which received the credits.
 
3. Identification after settlement and transfer to a third party

If the problem is subsequently identified beyond doubt after the bad credits have been received by a third party in good faith, SIX SIS AG uses the serial numbers to trace the suspicious credits to the SIX SIS participant that made the delivery and retroactively rejects the credits. In concrete terms, SIX SIS AG consults the delivering party and supplies replacement credits from that party's registered holdings.

If these holdings are not sufficient to meet the delivery obligations, SIX SIS AG
requests a replacement delivery from the party. If this request is not met within 5 bank working days, SIX SIS AG arranges for a replacement purchase (forced buy-in) at the expense of the delivering party. These replacement credits are credited to the receiving party. In these situations SIX SIS AG acts on a reasonable-effort basis and does not assume any warranty obligation.