Post-vintage year auction concept is linked to the fact that in the Australian carbon scheme the final surrender date for each compliance year is 1 February of the following compliance year (compliance year begin on 1 July, the financial years beginning on 1 July 2012, 1 July 2013 and 1 July 2014 are fixed charge years, later financial years are flexible charge years).

It is proposed that one auction of each vintage will be held after the end of the relevant compliance year in the lead-up to the final surrender date (i.e. after 1 December following the vintage year and at least four weeks prior to the final surrender date of 1 February the following vintage year). This will allow for an auction to be held after liable entities have reported their emissions and know their liability with greater certainty.

Under the EU ETS the issue of auction calendar is more complicated given separated rules regarding aviation allowances as well as op-out auction platforms.
But generally the Auctioning Regulation stipulates that auctions are more frequent and as from the sixth auction or earlier, the auction platform should conduct auctions of allowances at least on a weekly basis (with the exception of 2012 when the frequency of auctions is monthly at least) and auctions of aviation allowances at least on a two-monthly basis (due to lower volumes). Volumes of EUAs of the third trading period auctioned in so-called “early auctions” (i.e. in 2012) by each Member State is currently set out in Annex I to the Auctioning Regulation.


As regards the participation arrangements in the Australian cap-and-trade it is proposed that persons wishing to participate in auctions will need to register with the Regulator as a participant and show they meet competency and collateral requirements as determined by the Regulator. The Regulator will make public any competency requirements and details of training at least 3 months prior to an auction.

Carbon units will, however, be financial products for the purposes of the Corporations Act 2001 (Corporations Act) and the Australian Securities and Investments Commission Act 2001 (ASIC Act), which potentially triggers the market misconduct, disclosure and licensing provisions of those acts as well as general consumer protection provisions.

People who are in the business of providing financial services involving financial products will need to hold an Australian financial services (AFS) licence, issued by ASIC unless they are exempt from the requirement to hold a licence. There are some exemptions outlined in the Corporations Act, and additional exemptions are being proposed specifically for carbon units.

People who do not hold an AFS licence and are not required to do so will not have the same obligations as an AFS licence holder when for example buying units in an auction on their own behalf. Other participants, such as liable companies and individuals, will not be subject to these obligations if they purchase carbon units on their own behalf.

Under EUETS rules the MiFID Directive does not apply currently to the secondary trading in spot emission allowances while the revision of this Directive (so-called MiFID II) reclassifies  emission allowances as financial instruments (see: ‘MIFID II and emissions – consequences under preliminary investigation’). The Auctioning Regulation however already contains complex provisions on market abuse (Chapter X) that would apply to two-days spot and five-days futures in the event where two-day spot or five-days futures were not financial instruments within the meaning of Article 1(3) of MAD Directive (2003/6/EC – also currently under revision).
It seems that under EU ETS the practical choice between the two-days spot (not being at present financial instruments) and five-days futures (qualifying as financial instruments within the MiFID Directive) is left to the tenderers participating in the tender for the joint procurement of common auction platform and consequently depending on the outcome of the tender. Such a view is supported by the text of the ‘Tender Specification for the Joint procurement of common auction platform’ (part II p. 14 - draft 8 November 2011), revealed by the European Commission, which contains the provision that the tenderers should describe in their offers, ‘the delivery period and whether the auctioned product falls within the definition of the two-day spot or five-day futures’.