SUBMISSION COVER SHEET

IMPORTANT: Check box if Confidential Treatment is requested 

Registered Entity Identifier Code (optional): 23-220 (2 of 2)

Organization: New York Mercantile Exchange, Inc. ("NYMEX")

Filing as a: DCM SEF DCO SDR 

Please note - only ONE choice allowed.

Filing Date (mm/dd/yy): 05/18/23 Filing Description: Initial Listing of the European Union 

Allowance (EUA) Futures and European Union Allowance (EUA) Option Contracts

SPECIFY FILING TYPE 

Please note only ONE choice allowed per Submission.

Organization Rules and Rule Amendments

Certification § 40.6(a)

Approval § 40.5(a)

Notification § 40.6(d)

Advance Notice of SIDCO Rule Change § 40.10(a)

SIDCO Emergency Rule Change § 40.10(h)

Rule Numbers: 

New Product Please note only ONE product per Submission.

Certification § 40.2(a) 

Certification Security Futures § 41.23(a)

Certification Swap Class § 40.2(d)

Approval § 40.3(a)

Approval Security Futures § 41.23(b)

Novel Derivative Product Notification § 40.12(a)

Swap Submission § 39.5

Product Terms and Conditions (product related Rules and Rule Amendments)

Certification § 40.6(a) 

Certification Made Available to Trade Determination § 40.6(a)

Certification Security Futures § 41.24(a)

Delisting (No Open Interest) § 40.6(a) 

Approval § 40.5(a)

Approval Made Available to Trade Determination § 40.5(a)

Approval Security Futures § 41.24(c)

Approval Amendments to enumerated agricultural products § 40.4(a), § 40.5(a)

“Non-Material Agricultural Rule Change” § 40.4(b)(5)

Notification § 40.6(d)

Official Name(s) of Product(s) Affected: See filing.

Rule Numbers: See filing.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Christopher Bowen 

Managing Director and Chief Regulatory Counsel

Legal Department

May 18, 2023

VIA ELECTRONIC PORTAL

Mr. Christopher J. Kirkpatrick

Office of the Secretariat

Commodity Future Trading Commission

Three Lafayette Centre

1155 21st Street, N.W.

Washington, DC 20581

Re: CFTC Regulation 40.2(a) Certification. Initial Listing of the European Union 

Allowance (EUA) Futures and Option Contracts.

NYMEX Submission No. 23-220 (2 of 2)

Dear Mr. Kirkpatrick:

New York Mercantile Exchange, Inc. (“NYMEX” or “Exchange”) is certifying to the Commodity Futures 

Trading Commission (“CFTC” or “Commission”) the initial listing of the physically-delivered European Union 

Allowance (EUA) Futures and European Union Allowance (EUA) Option contracts (the “Contracts”) for 

trading on the CME Globex electronic trading platform (“CME Globex”) and for submission for clearing via 

CME ClearPort effective Sunday, June 4, 2023 for trade date Monday, June 5, 2023.

Contract Title European Union Allowance (EUA) 

Futures

European Union Allowance 

(EUA) Option

CME Globex/CME ClearPort Code ECF ECO

Rulebook Chapter 1253 1254

Settlement Type Physical Physically delivered into 

underlying futures

Contract Size 1,000 European Union Allowances (EUAs)

Listing Schedule

Monthly contracts listed for 3 

consecutive months, quarterly 

contracts (Mar/Jun/Sep/Dec cycle) 

listed for 9 consecutive quarters and 

all December contracts through and 

including December 2030.

Quarterly contracts listed for 6 

consecutive quarters 

(Mar/Jun/Sep/Dec cycle). All 

December contracts through and 

including December 2030.

Pricing Quotation EUR per EUA

First Listed Month July 2023 September 2023

Minimum Price Fluctuation EUR 0.01 per EUA EUR 0.005 per EUA

Value per tick EUR 10.00 EUR 5.00

Block Trade Minimum Threshold 5 contracts – subject to a minimum 15-minute reporting window

Termination of Trading

Trading in the contract shall terminate 

at 6:00 p.m. Netherlands local time on 

the last Monday of the delivery month 

for the expiring contract, except as 

follows: 

If the last Monday of the delivery month 

occurs on a date on which the Union 

Registry is closed or not available, an 

Exchange Holiday or a day on which 

the administrator of the Union Registry 

The option contract shall expire at 

the close of trading three business 

days prior to the expiration of the 

underlying European Union 

Allowance (EUA) futures contract.
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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in the Netherlands is not processing 

transfers (“a Union Registry Holiday”) 

or, if an Exchange Holiday or Union 

Registry Holiday occurs on any of the 

four (4) days following the last Monday 

of the delivery month, trading shall 

cease on the penultimate Monday of 

the delivery month. 

If the penultimate Monday of the 

delivery month occurs on a date on 

which the Union Registry is closed or 

not available, an Exchange Holiday or 

a day on which the administrator of the 

Union Registry in the Netherlands is 

not processing transfers (“a Union 

Registry Holiday”) or, if an Exchange 

Holiday or Union Registry Holiday 

occurs on any of the four (4) days 

following the penultimate Monday of 

the delivery month, trading shall cease 

on the antepenultimate Monday of the 

delivery month.

CME Globex Matching Algorithm First in First Out (FIFO)

Underlying Futures Contract

Title/Commodity Code

n/a Option underlying is the December 

contract of the current calendar 

year of the European Union 

Allowance (EUA) Futures (ECF).

Strike Price Increment n/a EUR 0.005

Strike Price Listing Schedule n/a At-the-money strikes then dynamic 

thereafter

Option Type n/a European Style

Margining Style n/a Futures-Style

Trading and Clearing Hours

CME Globex Pre-Open: Sunday 4:00 p.m. - 5:00 p.m. Central Time/CT 

Monday - Thursday 4:45 p.m. - 5:00 p.m. CT 

CME Globex: Sunday - Friday 5:00 p.m. CT with a daily maintenance 

period from 4:00 p.m. - 5:00 p.m. CT 

CME ClearPort: Sunday - Friday 5:00 p.m. - 4:00 p.m. CT with no reporting 

Monday - Thursday from 4:00 p.m. - 5:00 p.m. CT

The Exchange reviewed the designated contract market core principles (“Core Principles”) as set forth in 

the Commodity Exchange Act (“CEA”) and identified that the Contracts may have some bearing on the 

following Core Principles:

• Compliance with Rules: Trading in the Contracts will be subject to the rules in Rulebook Chapter 

4 which includes prohibitions against fraudulent, noncompetitive, unfair and abusive practices. 

Additionally, trading in these Contracts will also be subject to the full range of trade practice rules, 

the majority of which are contained in Chapter 5 and Chapter 8 of the Rulebook. As with all products 

listed for trading on one of CME Group’s designated contract markets, activity in these products

will be subject to extensive monitoring and surveillance by CME Group’s Market Regulation 

Department. The Market Regulation Department has the authority to exercise its investigatory and 

enforcement power where potential rule violations are identified.

• Contracts Not Readily Subject to Manipulation: The Contracts are not readily subject to

manipulation due to the deep liquidity and robustness in the underlying cash market.

• Prevention of Market Disruption: Trading in the Contracts will be subject to Rules of NYMEX, 

which include prohibitions on manipulation, price distortion and disruption to the delivery process. 

As with any new products listed for trading on a CME Group designated contract market, trading 
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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activity in the Contracts proposed herein will be subject to monitoring and surveillance by CME 

Group’s Market Regulation Department.

• Position Limitations or Accountability: The speculative position limits for the Contracts as 

demonstrated in this submission are consistent with the Commission’s guidance.

• Availability of General Information: The Exchange will publish on its website information 

regarding the Contract’s specifications, terms, and conditions, as well as daily trading volume, open 

interest, and price information.

• Daily Publication of Trading Information: The Exchange will publish the Contracts’ trading 

volumes, open interest levels, and price information daily on its website and through quote vendors 

for the Contracts.

• Execution of Transactions: The Contracts will be listed for trading on the CME Globex electronic 

trading and for clearing through the CME ClearPort. The CME Globex trading venue provides for 

competitive and open execution of transactions. CME Globex affords the benefits of reliability and 

global connectivity.

• Trade Information: All requisite trade information for the Contracts will be included in the audit trail 

and is sufficient for the Market Regulation Department to monitor for market abuse.

• Financial Integrity of Contract: The Contracts will be cleared by the CME Clearing House, a 

derivatives clearing organization registered with the CFTC and subject to all CFTC regulations 

related thereto.

• Protection of Market Participants: NYMEX Rulebook Chapters 4 and 5 set forth multiple 

prohibitions that preclude intermediaries from disadvantaging their customers. These rules apply 

to trading in all of the Exchange’s competitive trading venues and will be applicable to transaction 

in the Contracts.

• Disciplinary Procedures: Chapter 4 of the Rulebook contains provisions that allow the Exchange 

to discipline, suspend or expel members or market participants that violate the Rulebook. Trading 

in the contracts will be subject to Chapter 4, and the Market Regulation Department has the 

authority to exercise its enforcement power in the event rule violations in the product are identified.

• Dispute Resolution: Disputes with respect to trading in the Contracts will be subject to the 

arbitration provisions set forth in Chapter 6 of the Rulebook. Chapter 6 allows all non-members to 

submit a claim for financial losses resulting from transactions on the Exchange to arbitration. A 

member named as a respondent in a claim submitted by a nonmember is required to participate in 

the arbitration pursuant to Chapter 6. Additionally, the Exchange requires that members resolve 

all disputes concerning transactions on the Exchange via arbitration.

Pursuant to Section 5c(c) of the Act and CFTC Regulation 40.2(a), the Exchange hereby certifies that listing 

the Contracts complies with the Act, including regulations under the Act. There were no substantive 

opposing views to listing of the Contracts. 

The Exchange certifies that this submission has been concurrently posted on the Exchange’s website at 

http://www.cmegroup.com/market-regulation/rule-filings.html. 
300 Vesey Street New York, NY 10282 T 212 299 2200 F 212 301 4645 christopher.bowen@cmegroup.com cmegroup.com

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Please note that concurrently with this listing, the Exchange delisted the three (3) EUA futures and option 

contracts that were previously suspended from trading and clearing see NYMEX Submission No. 23-221

dated May 15, 2023.

Should you have any questions concerning the above, please contact the undersigned at (212) 299-2200

or e-mail CMEGSubmissionInquiry@cmegroup.com.

Sincerely,

/s/Christopher Bowen

Managing Director and Chief Regulatory Counsel

Attachments: Exhibit A: NYMEX Rulebook Chapters 1253 and 1254

Exhibit B: Position Limit, Position Accountability, and Reportable Level Table in 

 Chapter 5 of the NYMEX Rulebook (attached under separate cover)

Exhibit C: Strike Price Listing and Exercise Procedure Table 

Exhibit D: NYMEX Rule 588.H. – (“Globex Non-Reviewable Trading Ranges”) Table

Exhibit E: Exchange Fees

Exhibit F: Cash Market Overview and Analysis of Deliverable Supply
5

EXHIBIT A

NYMEX Rulebook

Chapter 1253

European Union Allowance (EUA) Futures

1253100. SCOPE OF CHAPTER

This chapter is limited in application to European Union Allowance (EUA) Futures. The procedures 

for trading, clearing, delivery and settlement not specifically covered herein or in Chapter 7 shall be 

governed by the general rules of the Exchange.

The provisions of these rules shall apply to all EUAs bought or sold for future delivery on the 

Exchange with delivery at the Union Registry.

The terms “seller” and “buyer” shall mean the seller of the physical product and the buyer of the 

physical product, respectively. The seller’s Clearing Member and buyer’s Clearing Member may 

utilize a Designee to perform their respective and necessary obligations with regard to transferring 

and accepting allowances at the Union Registry in accordance with Rule 1253103. 

The EU ETS is based on Directive 2003/87/EC of the European Parliament and of the Council of 13 

October 2003 establishing a scheme for greenhouse gas emissions allowance trading within the 

Community and amending Council Directive 96/61/EC, which entered into force on 25 October 2003, 

as amended from time to time (the “Directive”).

The term “Authorised Representative” shall have the meaning in the Registry Regulation.

The term “Clearing House Registry Account” shall mean the Trading Account of the Clearing House 

at the Union Registry as notified by the Clearing House from time to time.

The term “Communication Link” shall mean the electronic exchange of messages/notifications (1) by 

which a buyer and seller communicate with the Union Registry, and/or (2) by which the Union 

Registry communicates with EUTL. 

The term “Designee” means a third party appointed by a Clearing Member to effect the delivery or 

receipt of EUAs into a Registry Account in place of such Clearing Member in respect of an open long 

position or an open short position and who in each case is permitted to make or take delivery of EUAs 

to or from the Clearing House.

The term “EUA” or “European Union Allowance” shall mean an allowance to emit one metric tonne 

of carbon dioxide or an amount of other greenhouse gas equivalent set out in the Directive during a 

specified period valid for the purposes of meeting the requirements of the Directive and transferable 

in accordance with the Directive that is valid for settlement of obligations under the Directive and as 

may be determined and notified by the Exchange in its absolute discretion as valid for trading and 

delivery under the contract and which shall be applicable to existing and new contracts upon such 

notification by the Exchange.

The term “EUTL” shall mean the independent transaction log provided for in Article 20(1) of the 

Directive, which automatically checks, records and authorizes all transactions between accounts in 

the Union Registry, the operation of which is further detailed in the Registry Regulation. 
6

The term “Registry Account” shall mean a valid Trading Account at the Union Registry within the 

meaning of the Registry Regulation, where the national administrator is the Netherlands or such other 

national administrator as agreed by the Clearing House from time to time.

The term “Registry Regulation” shall mean the Commission Delegated Regulation (EU) 2019/1122 

of 12 March 2019 supplementing the Directive as regards the functioning of the Union Registry.

The terms “Trusted Account” and “Trading Account” shall have the meaning given in the Registry 

Regulation.

The term “Union Registry” shall mean the single EU Registry operated pursuant to the Registry 

Regulation for the accounting of transactions under the EU ETS in a standardized and secured 

electronic database to track the issue, holding, transfer and cancellation of EUAs.

For purposes of these rules, unless otherwise specified, times referred to herein shall refer to and 

indicate the prevailing time in the Netherlands.

1253101. CONTRACT SPECIFICATIONS

The European Union Allowance (EUA) Futures contract physically delivers European Union 

Allowance (EUAs) via Trading Accounts maintained at the Union Registry. 

1253102. TRADING SPECIFICATIONS

Trading in European Union Allowance (EUA) Futures is regularly conducted in all calendar months. 

The number of months open for trading at a given time shall be determined by the Exchange.

1253102.A. Trading Schedule

The hours for trading shall be determined by the Exchange.

1253102.B. Trading Unit

The contract unit shall be one thousand (1,000) EUAs for a delivery made by transfer through the 

Union Registry.

1253102.C. Price Increments 

The minimum price fluctuation shall be €0.01 per EUA (€10 per contract). Prices shall be quoted in 

Euros and Euro cents per EUA. Prices shall be exclusive of any taxes or duties that may be applied 

to a transaction.

1253102.D. Position Limits, Exemptions, Position Accountability and Reportable Levels

The applicable position limits and/or accountability levels, in addition to the reportable levels, are set 

forth in the Position Limit, Position Accountability and Reportable Level Table in the Interpretations 

& Special Notices Section of Chapter 5. 

A Person seeking an exemption from position limits for bona fide commercial purposes shall apply 

to the Market Regulation Department on forms provided by the Exchange, and the Market Regulation 

Department may grant qualified exemptions in its sole discretion.

Refer to Rule 559 for requirements concerning the aggregation of positions and allowable 

exemptions from the specified position limits.

1253102.E. Termination of Trading 

Trading in the contract shall terminate at 6:00 p.m. on the last Monday of the delivery month for the 

expiring contract, except as follows: 

If the last Monday of the delivery month occurs on a date on which the Union Registry is closed or 

not available, an Exchange Holiday or a day on which the administrator of the Union Registry in the 

Netherlands is not processing transfers (“a Union Registry Holiday”) or, if an Exchange Holiday or 

Union Registry Holiday occurs on any of the four (4) days following the last Monday of the delivery 

month, trading shall cease on the penultimate Monday of the delivery month. 

If the penultimate Monday of the delivery month occurs on a date on which the Union Registry is 

closed or not available, an Exchange Holiday or a day on which the administrator of the Union 

Registry in the Netherlands is not processing transfers (“a Union Registry Holiday”) or, if an Exchange 

Holiday or Union Registry Holiday occurs on any of the four (4) days following the penultimate 
7

Monday of the delivery month, trading shall cease on the antepenultimate Monday of the delivery 

month. 

Any contracts remaining open after the last day of trading must be either:

(a) Settled by delivery which shall take place in accordance with Rule 1253105; or

(b) Liquidated by means of a bona fide Exchange for Related Position (“EFRP”) pursuant to Exchange 

Rule 538. An EFRP is permitted in the expiring futures contract at any time before 8:00 p.m. on the 

last day of trading of the expiring futures contract. An EFRP which establishes a futures position for 

either the buyer or the seller in an expired futures contract shall not be permitted following the 

termination of trading of an expired futures contract.

1253103. DELIVERY REQUIREMENTS

EUA delivery shall comply with all requirements for the electronic transfer of EUAs within the Union 

Registry in accordance with the Registry Regulation. The Clearing Member shall be responsible for 

fulfilling the delivery requirements of every contract that it has entered into. A Clearing Member may 

fulfil delivery requirements itself or it may appoint the buyer or seller (as applicable) to act as 

Designee(s) in its place to fulfil delivery requirements. The Clearing Member must notify the Clearing 

House of the appointment of each relevant Designee through submission of a completed Designee 

Notification Form (signed by an authorized signatory of each of the Clearing Member and the 

Designee) to the Clearing House. A Clearing Member may appoint multiple Designees such that a 

different Designee may act in respect of any account or customer account, provided that any single 

account shall have only a single Designee appointed to effect deliveries in respect of such account. 

Notwithstanding the use of a Designee, all Clearing Members will remain ultimately responsible for 

performance of all applicable contract terms specific to the sellers’ Clearing Members and buyers’ 

Clearing Members, as applicable.

Each Registry Account of any Clearing Member or Designee (buyer or seller) utilized for deliveries 

under this contract must be established as a Trusted Account of the Clearing House Registry Account 

prior to any delivery.

1253104. DELIVERY PROCEDURES 

The Exchange is a party to all deliveries under this contract and will receive EUAs from the seller’s 

Clearing Member or from one or more Designee(s) (as applicable) into the Clearing House Registry 

Account. Following receipt from the seller’s Clearing Member or their Designee(s), the Exchange 

will deliver EUAs to the buyer’s Clearing Member or their Designee(s) from the Clearing House 

Registry Account to the Registry Account nominated by the buyer’s Clearing Member.

The seller’s Clearing Member or their Designee (as applicable) shall comply with such requirements 

and obligations imposed by or under the Registry Regulation in all respects material to the 

submission of the forms noted in this rule. The buyer’s Clearing Member or, where applicable, its 

Designee(s) shall comply with such requirements and obligations imposed by or under the Registry 

Regulation in all respects material to ensure the acceptance of a valid transfer into the relevant 

Registry Account. If a provision of the rules of this Chapter or the Exchange rules is inconsistent with 

a provision of the Registry Regulation, the provision of the rules of this Chapter and the Exchange 

rules shall prevail as between the buyer’s Clearing Member, seller’s Clearing Member, and the 

Exchange to the extent of such inconsistency and to the extent permitted by law.

By transferring EUAs to the Exchange (either directly or through a Designee), the seller’s Clearing 

Member represents and warrants that, at the time of delivery, it (or its Designee, as applicable) has 

good and marketable title to such EUAs, that such EUAs are free and clear of all liens, security 

interests, claims, encumbrances and adverse claims.
8

1253104.A. Responsibilities of Clearing Members

Notice of Intention to Accept

Exchange Clearing Members having open long positions shall provide the Clearing House with a 

Notice of Intention to Accept delivery by 10:00 p.m. on the final day of trading of the delivery month. 

The Notice of Intention to Accept must be in the form prescribed by the Exchange and must be 

properly completed and indicate the name of the buyer, the number of contracts to be accepted, the 

Union Registry Account Number for the relevant Registry Account, and any additional information as 

may be required by the Exchange.

Notice of Intention to Deliver

Exchange Clearing Members having open short positions shall provide the Clearing House with a 

Notice of Intention to Deliver by 10:00 p.m. on the final day of trading of the delivery month. The 

Notice of Intention to Deliver must be in the form prescribed by the Exchange, and must be properly 

completed, indicate the name of the seller, the number of contracts to be delivered, the Union 

Registry Account Number, and any additional information as may be required by the Exchange.

1253104.B. Final Settlement Price

The final settlement price shall be the basis for delivery. 

1253104.C. Assignment Day

The Clearing House shall allocate Notices of Intention to Accept and Notices of Intention to Deliver

by matching positions, to the extent possible. 

The Clearing House shall provide Assignment Notice Reports to the respective Clearing Members 

on the final day of trading of the delivery month.

1253105. TIMING OF DELIVERY

1. The seller’s Clearing Member or Designee (as applicable) shall submit a transfer request via the 

Communication Link instructing the transfer of EUAs subject to delivery to the Clearing House 

Registry Account the Business Day following assignment and such EUAs shall be received into the 

Clearing House Registry Account no later than 1:00 p.m. on the second Business Day on which the 

Union Registry administrator in the Netherlands is processing transfers of EUAs after the final day of 

trading of the delivery month.

2. The buyer’s Clearing Member or Designee (as applicable) shall receive EUAs from the Clearing 

House Registry Account by 4:00 p.m. on the third Business Day after the final day of trading of the 

delivery month, except where the national administrator of the Registry Account of the buyer’s 

Clearing Member or Designee (as applicable) is not processing transfers, in which case the transfer 

to the buyer’s Clearing Member or Designee (as applicable) may be delayed.

3. The buyer’s Clearing Member shall deposit/transfer Euro currency equal to the full value of the 

product to the designated Clearing House bank account by 1:00 p.m. on the second Business Day 

following the last day of trading of the delivery month. 

4. For each seller’s Clearing Member that has satisfied its obligations under subsection (1) of this rule, 

the Clearing House shall pay the seller’s Clearing Member the full contract value by 4:00 p.m. on the 

third Business Day following the last day of trading of the delivery month.

The timings for delivery by the Clearing House shall be dependent on the operation of the Union 

Registry and therefore may be subject to change. The Clearing House shall not be liable for any 

delay in delivery of EUAs under Rule 1253105. where such delays relate to the delay or failure of 

processing of transactions by the Union Registry or any national administrator of a Registry Account.

1253106. DELIVERY MARGINS AND PAYMENT 

1253106.A. Definitions

For purposes of this Rule 1253106:

“Payment Date” shall mean the date on which the Clearing House transfers Payment in connection 

with a delivery to a seller’s Clearing Member.

“Payment” shall include the final settlement price times the number of contracts times 1,000.

1253106.B. Margin
9

The buyer’s Clearing Member and seller’s Clearing Member shall deposit with the Clearing House 

margins in such amounts and in such form as required by the Clearing House. Such margins shall 

be returned on the Business Day following notification to the Exchange that delivery and Payment 

have been completed.

1253106.C. Payment

Any Payment made on the Payment Date shall be based on EUAs that the seller’s Clearing Member 

is obligated to deliver pursuant to the applicable delivery.

1253107. VALIDITY OF DOCUMENTS

The Exchange makes no representation with respect to the authenticity, validity or accuracy of any 

Notice of Intention to Accept, Notice of Intention to Deliver, or of any document or instrument 

delivered pursuant to these rules.

1253108. ALTERNATIVE DELIVERY PROCEDURE

A seller and buyer matched by the Exchange under Rule 1253104.C. may agree to make and take 

delivery under terms or conditions which differ from the terms and conditions prescribed by this 

Chapter. In such a case, Clearing Members shall execute an Alternative Notice of Intention to Deliver 

on the form prescribed by the Exchange and shall deliver a completed and executed copy of such 

notice to the Exchange. The delivery of an executed Alternative Notice of Intention to Deliver to the 

Exchange shall release the Clearing Members and the Exchange from their respective obligations 

under the rules of this Chapter and any other rules regarding physical delivery. 

In executing such notice, Clearing Members shall indemnify the Exchange against any liability, cost 

or expense the Exchange may incur for any reason as a result of the execution, delivery, or 

performance of such contracts or such agreement, or any breach thereof or default thereunder. Upon 

receipt of an executed Alternative Notice of Intention to Deliver, the Exchange will return to the 

Clearing Members all margin monies held for the account of each with respect to the contracts 

involved.

1253109. VAT

While contract prices shall be exclusive of any taxes or duties, should Value Added Tax (“VAT”) be 

payable on European Union Allowance (EUA) Futures, the relevant buyer shall be responsible for 

ensuring that it accounts for such VAT to the relevant tax authority under the reverse charge 

procedure where applicable.

Prior to entry into any European Union Allowance (EUA) Futures contract, Clearing Members must 

provide such information reasonably requested by the Clearing House for the purposes of 

determining the applicability of VAT or other taxes, including but not limited to valid VAT registration 

details, and for the purposes of accounting for any applicable taxes to a tax authority. The Clearing 

Member is deemed to represent and warrant that the information it has provided under this Rule is 

complete and accurate each time a contract is entered into.

Where VAT is due and payable and the reverse charge procedure does not apply, including but not 

limited to circumstances where VAT must be declared by the buyer under the rules for the “place of 

service” regarding services rendered in relation to European Union Allowance (EUA) Futures 

contracts:

1. the Clearing Member must notify the Clearing House prior to entry into any European Union 

Allowance (EUA) Futures contract; and

2. the buyer must make payment of such VAT to the Clearing House as seller at the same time as 

the payment of the purchase price.

Where the reverse charge procedure applies, the Clearing Member warrants and represents that the 

relevant buyer has a valid VAT registration and will account for any applicable VAT to the relevant 

tax authority under the reverse charge procedure.

The Clearing Member agrees to indemnify the Clearing House in respect of any VAT, interest, 

penalties and associated costs of the Clearing House in the event that the Clearing House does not 

receive any applicable VAT from the relevant buyer when due under this rule.
10

1253110. LIABILITY

Without prejudice to the generality of the rules of the Exchange, neither the Exchange, the Clearing 

House nor any of its Affiliates shall be liable to any person for any losses, liabilities, damages, claims, 

costs or expenses arising from or in connection with: 

1. the availability or unavailability or performance or failure to perform of any Communication Link, 

the Union Registry, any national administrator of the Union Registry, the EUTL or any other part 

of the infrastructure for the issue, holding, transfer, acquisition, surrender, cancellation, 

replacement or delivery of EUAs, including for the avoidance of doubt, in relation to any loss or 

unavailability of EUAs held by the Exchange or transferred to or from the Exchange; 

2. the validity or otherwise of any EUA for the purposes of meeting the requirements of the Directive 

or settlement of obligations under the Directive; 

3. any act or omission of the European Commission or other governmental body connected with 

the EU ETS, the operator of any Communication Link, the Union Registry or any national 

administrator of the Union Registry or any administrator or the EUTL; or

4. any act or omission of an Authorised Representative or Designee of any party.
11

Chapter 1254

European Union Allowance (EUA) Option

1254100. SCOPE OF CHAPTER 

This chapter is limited in application to put and call options on European Union Allowance (EUA) 

futures contracts. In addition to the rules of this chapter, transactions in European Union Allowance 

(EUA) Options shall be subject to the general rules of the Exchange. 

For purposes of these rules, unless otherwise specified, times referred to herein shall refer to and 

indicate the prevailing time in the Netherlands.

1254101. OPTION CHARACTERISTICS 

The number of months open for trading at a given time shall be determined by the Exchange. 

1254101.A. Trading Schedule 

The hours of trading for this contract shall be determined by the Exchange. 

1254101.B. Trading Unit 

The European Union Allowance (EUA) Option is an option on the European Union Allowance (EUA) 

Futures Contract. On exercise of a call option, the long position will be assigned a long position in 

the European Union Allowance (EUA) first nearby December Futures at the strike price. On exercise 

of a call option, the short position will be assigned a short position in the European Union Allowance 

(EUA) first nearby December Futures position at the strike price. On exercise of a put option, the long 

position will be assigned a short position in the European Union Allowance (EUA) first nearby 

December Futures at the strike price. On exercise of a put option, the short position will be assigned 

a long position in the European Union Allowance (EUA) first nearby December Futures position at 

the strike price. 

1254101.C. Price Increments 

The minimum price fluctuation is €0.005 per EUA (€5 per contract). Prices shall be quoted in Euros 

(€) and Euro cents (¢) per EUA.

1254101.D. Position Limits, Exemptions, Position Accountability and Reportable Levels 

The applicable position limits and/or accountability levels, in addition to the reportable levels, are set 

forth in the Position Limit, Position Accountability and Reportable Level Table in the Interpretations 

& Special Notices Section of Chapter 5. A Person seeking an exemption from position limits for bona 

fide commercial purposes shall apply to the Market Regulation Department on forms provided by the 

Exchange, and the Market Regulation Department may grant qualified exemptions in its sole 

discretion. Refer to Rule 559 for requirements concerning the aggregation of positions and allowable 

exemptions from the specified position limits. 

1254101.E. Termination of Trading 

The option contract shall expire at the close of trading three business days prior to the expiration of 

the underlying European Union Allowance (EUA) futures contract. 

On the last trading day, trading terminates at 2:00 p.m. The option shall be available for automatic 

exercise. The in-the-money value of the option shall be based on a methodology to be published by 

the Exchange that reflects markets prices at the termination of trading of a contract. Notwithstanding 

the above, the Exchange may determine an alternative termination of trading time on the last trading 

day for specific expiries on NYMEX Business Days immediately prior to or concurrent with local or 

U.S. holidays.

1254101.F Option Type 

The option is a European-style option which can only be exercised into the underlying futures on 

expiration day. 

1254101.G. Settlement Variation and Option Value 

This contract is a future-style margin option. Settlement variation rules for futures-style margin 

options conform to those set forth for non-options stipulated in NYMEX Rule 814. As such, when a 

clearing member or its customers is long or short any amount of any commodity for a settlement 
12

cycle, as indicated by Clearing House records, settlement for any outstanding exposure shall be 

made with the Clearing House based on the settlement price for that settlement cycle. For futuresstyle margin options, each clearing member and its customers shall pay to, or collect from, the 

Clearing House any loss or profit, as the case may be, represented by the difference between (x) the 

settlement price of the futures-style margin option for such settlement cycle and (y) the settlement 

price of the futures-style margin option for the prior settlement cycle (or, for the first settlement cycle 

after the purchase/sale of such option, the price at which the option was purchased or sold).

1254102. EXERCISE PRICES 

Transactions shall be conducted for option contracts as set forth in Rule 300.20.
13

EXHIBIT B

NYMEX Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

Position Limit, Position Accountability, and Reportable Level Table 

(under separate cover)
14

EXHIBIT C

NYMEX Rulebook

Chapter 300

(“Options Contracts”)

NYMEX Rule 300.20. – (“Strike Price Listing and Exercise Procedures”) Table

Commodity 

Code 

CME 

Globex 

Code

Product Name Product 

Group

Product 

Subgroup Exchange Rulebook Chapter

Strike Price 

Listing Rule

Exercise 

Style

Contrary 

Instructions

Margin 

Style

Exact At-TheMoney 

Characteristics

Underlying 

Commodity 

Code

Underlying 

Product Name

ECO ECO

European Union 

Allowance (EUA) 

Option

Energy Emissions NYMEX 1254

Minimum atthe-money 

strike at 

€0.005 per 

environmental 

offset 

increment 

plus dynamic 

strikes at 

€0.005 per 

environmental 

offset 

increment

European No Futures Execise Calls. 

Abandon Puts. ECF

European Union 

Allowance (EUA) 

Futures
15

EXHIBIT D

NYMEX Rulebook

Chapter 5

(“Trading Qualifications and Practices”)

NYMEX Rule 588.H. – (“Globex Non-Reviewable Trading Ranges”) Table

(additions underscored)

Outrights Spreads

Instrument Globex 

Symbol

Globex Non-Reviewable 

Ranges (NRR)

NRR: Globex 

Format

NRR:Minimum 

Ticks

NRR: Globex 

Format

NRR: Minimum 

Ticks

European Union 

Allowance (EUA) 

Futures

ECF € .40 per allowance 40 40 Each leg evaluated as an 

outright

Globex 

Symbol Globex Non-Reviewable Ranges (NRR)

European Union 

Allowance (EUA) 

Option

ECO

The greater of the following:

•Delta multiplied by the underlying futures non-reviewable range

•20% of premium up to 1⁄4 of the underlying futures non-reviewable 

range

•5 ticks
16

EXHIBIT E

Exchange Fees 

Exchange Fees Member Non-Member

CME Globex $1.50 $2.00

EFP $1.50 $2.00

Block $1.50 $2.00

EFR/EOO $1.50 $2.00

Processing Fees House Account Customer Account

Delivery Notice (Futures) $0.50 $0.50

Option Exercise / Assignment 

Notice (Options) $0.50 $0.50

Facilitation Fee $0.60

Give-Up Surcharge $0.05

Position Adjustment/Position 

Transfer $0.10
17

EXHIBIT F

Cash Market Overview and Analysis of Deliverable Supply

Introduction

This memo proposes to determine deliverable supply in the European Union Allowance (EUA) market 

based on the annual volume of EUAs issued to the marketplace. Deliverable supply is estimated based on 

publicly available data from the European Environmental Agency1 and the European Commission.

2

Background

According to the World Bank, approximately 40 countries and more than 20 cities, states and provinces 

use a form of carbon pricing. Globally, carbon pricing mechanisms cover half of emissions emitted in these 

regions, amounting to about 13% of annual global greenhouse gas emissions.

3

Emissions trading schemes (ETS) apply the principle of cap-and-trade. A controlling body sets a maximum 

amount of carbon emissions that may be emitted in a given period (usually one year). Certificates 

representing these emissions are allocated and/or auctioned to participants. Each year, entities 

participating in the cap-and-trade mechanism must provide certificates in accordance with the amount of 

Co2 emitted. Entities that pollute less than forecast can sell excess certificates to other participants and are 

financially rewarded. By gradually reducing the supply of new certificates, the market price of those 

certificates should reflect a higher price of compliance, incentivizing participants to decrease carbon 

emissions through a market-based mechanism.

The scope of ETS mechanisms is varied, and ranges from the supranational EU ETS to regional 

mechanisms that covers cities (in China) or provinces/ states (U.S., Canada). The systems differ in the 

sectors covered, the share of allowances which is freely allocated, the cap trajectory (the rate at which 

allowances will be reduced) and the sectors covered. 

The EU ETS remains the largest ETS worldwide, accounting for approximately 90% of global emission 

trading volume according to a Refinitiv analysis.

4 The EU ETS is supported by a large secondary market, 

in which allowances are traded bilaterally or on an exchange-cleared basis on multiple venues. 

The EU ETS was launched in 2005 as a response to the 1997 Kyoto Protocol, which set legally binding 

emission reduction targets for certain industrialized countries. The development of the EU ETS went 

through various phases. Phase I (2005-2007) was a pilot scheme in which most allowances were given 

away for free. In the second phase (2008-2012), a higher proportion of allowances was auctioned off, the 

penalty for non-compliance was greatly increased (from EUR 40/ton to EUR 100/ton) and additional 

industries such as domestic aviation were included. Phase 3 (2013-2020) saw a further reduction in the 

amount of free allowances.

Phase 4 in the EU ETS (2021-2030) aligns the goals of the EU ETS to the targets captured in the 2015 

Paris agreement. It increases the annual reduction in allowances and introduces a market stability reserve 

(MSR). By placing excess certificates in a reserve, the MSR greatly reduced market surplus, leading to 

significantly higher prices of EU emission allowances (increasing from EUR 5/ton to >EUR 30/ton). In 

1

https://www.eea.europa.eu/

2 https://commission.europa.eu/index_en

3 https://www.worldbank.org/en/programs/pricing-carbon

4 https://www.reuters.com/article/us-europe-carbon-idUSKBN29W1HR
18

addition to power generation, the EU ETS covers industrial installations and domestic aviation – in total 

approximately 40% of EU emissions.

In July 2021, the European Commission adopted a series of legislative proposals to reduce net greenhouse 

gas emissions by 55% by 2030.

5

 In December 2022.

6 new rules were agreed for the aviation sector to help 

supports the overall aims of reducing net greenhouse gas emissions by at least 55% by 2030 under the EU 

Fit for 55 package. The inclusion means that free allowances will no longer be provided to the airline sector 

from 2026 onwards. In 2026, the European Commission will carry out an assessment of the Carbon 

Offsetting and Reduction Scheme for International Aviation (CORSIA) set up by the International Civil 

Aviation Organisation (ICAO), to see if it is sufficiently delivering on the goals of the Paris Agreement. 

Subject to the outcome of this assessment, the Commission will make a legislative proposal, which could 

extend the scope of EU emissions trading to departing flights if CORSIA is not sufficiently aligned with the 

Paris Agreement.

Deliverable Supply

Deliverable supply in emission certificates can be estimated based on the number of allowances that are 

available to market participants. In its early phases, the EU ETS freely allocated a vast majority of its 

allowances to support the nascent marketplace. The objective was to gradually reduce the amount of freely 

allocated allowances as the EU ETS enters its fourth phase. Covered installations must provide the 

appropriate number of EUAs by April of the following year (the “annual surrendering of allowances”). As 

such, the demand for EUAs does not naturally follow a seasonal cycle. Similarly, the supply side / 

auctioning of EUAs normally occurs regularly throughout the entire year, meaning that there is no seasonal 

element in market supply.

7 Allowances are freely tradable between market participants regardless whether 

they have been freely allocated to participants or auctioned off. Likewise, allowances created in a specific 

year can be used for compliance purposes in a later calendar year. Finally, trading in allowances occurs 

both in the primary market (via the auctioning process) and in the secondary market via physically delivered 

forwards and futures.

Table 1 shows the annual issuance of “new” EUAs, either freely allocated or auctioned off, minus the annual 

surrendered volume.

Table 1 – Annual issuances of allowances 

000 MT equivalent (contract equivalent) 2019 2020 2021 2019-2021 average

Total allocated Allowances 1,223,186 1,190,633 1,000,708 1,138,175 

Freely allocated 654,121 604,359 530,530 596,337 

Auctioned allowances 569,065 586,274 470,178 541,839 

Units surrendered 1,382,021 1,217,450 1,304,130 1,301,200 

Market surplus/deficit (158,835) (26,817) (303,422) (163,025)

Source: European Environment Agency8. Includes data for stationary installations and aviation

5 https://ec.europa.eu/clima/eu-action/eu-emissions-trading-system-eu-ets/market-stability-reserve_en

6 Airlines into the EU ETS https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7609

7 See EEX auction calendar

8

https://www.eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1
19

Table 2 shows the total number of allowances in circulation (TNAC), a number published each year by the 

European Commission. TNAC represents a running total of available allowances, meaning all issued and 

eligible allowances minus verified emissions over the prior years (since 2013). TNAC also subtracts 

allowances that have been placed in the MSR. As can be seen in the table, a growing quantity of allowances 

has been placed into the MSR.

TNAC = Supply – (Demand + allowances in the MSR)

Table 2 – TNAC calculation

TNAC calculation, '000 MT CO2

2019 2020 2021

2019-2021 

average

Supply 14,876,899 17,050,094 18,919,086 16,948,693 

Demand 12,194,278 13,546,770 14,837,189 13,526,079 

MSR 1,297,125 1,924,551 2,632,682 1,951,453 

TNAC 1,385,496 1,578,772 1,449,214 1,471,161 

Source:

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52020XC0513%2802%29

https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:52021XC0517(01)

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ%3AJOC_2022_195_R_0002

Basing the deliverable supply on yearly emission volumes only underestimates the true number of 

allowances that are available for delivery in the market: because emissions emitted in prior annual cycles 

but not surrendered yet continue to be available to market participants. The inventory thereof is tracked in 

the annual TNAC number.

The Exchange did not apply a seasonality adjustment. Likewise, there is no requirement to adjust for longterm contracts. The EUA market is mandated by a supranational governmental entity and therefore, EUA 

deliverable supply may not be affected by considerations that could apply to physical commodities. Any 

EUA allowance is freely tradable and can be used for compliance and/or trading purposes by any registered 

market participant. Participants do not have to own or operate a covered installation to participate in the 

EUA marketplace. 

By using the numbers above for TNAC, the Exchange derives the deliverable supply at 1,471,161 contract 

equivalents annually for the 2019 through 2021 period, equivalent to 122,597 contract equivalents per 

month. Current spot-month position limits are set at 20,000 contracts, equivalent to 16% of deliverable 

supply.