Carbon Trading
Climate change has become a prominent area of political and industrial interest in recent times and measures taken under international treaties such as the Kyoto Protocol, Clean Development Mechanism and Joint Implementation have stimulated growth in the market for carbon allowances and credits.
The carbon market can be said to be divided into 2 markets – regulated and voluntary markets. There are essentially two fundamental forms of tradable carbon instruments – allowances and credits.
As a result of the Markets in Financial Instruments Directive (MiFID), which came into force in November 2007, some of these instruments will now be caught within some of the new definitions of financial instruments. Accordingly, some firms may now find themselves trading instruments that previously were not "specified investments" but have now been brought within that definition through the introduction of MiFID.
Bovill have a growing number of clients in the carbon and clean tech sector and some of the services we provide to such firms include:
- Perimeter guidance - Bovill is able to provide advice on whether or not a particular activity or course of dealing constitutes a regulated activity requiring authorisation under FSMA. This may be of particular relevance to firms that may find that their activities are subject to regulation for the first time as a result of MiFID;
- Authorisation - For firms who find themselves within regulated activities territory, we can provide help in obtaining authorisation from the FSA. We can advise you on the nature of activities for which you will need authorisation and the various permissions you will require. Bovill have assisted carbon firms but also clean tech fund managers and private equity boutiques who specialize in investments in overseas credit emitting projects;
- Ongoing Support - We can provide support in a number of ways, including assistance with how to interpret the "Energy Market Participant" rules that are often applicable for this sector, or helping with the complexities of determining how exemptions from capital rules may apply.