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Article 57 of the Auctioning Regulation stipulates that a maximum bid-size, or any other remedial measures necessary to mitigate an actual or potential discernible risk of market abuse, money laundering, terrorist financing or other criminal activity, as well as anti- competitive behaviour, may be imposed by any auction platform after consulting the Commission and obtaining its opinion thereon, provided that implementation of a maximum bid-size or any other remedial measures would effectively mitigate the risk in question.
In such an event the maximum bid-size may either be expressed as a percentage of the total number of auctioned allowances in any given auction or a percentage of the total number of auctioned allowances in any given year, whichever may be most appropriate to deal with the risk of market abuse. For these purposes maximum bid-size means the maximum number of allowances that may be bid for, directly or indirectly, by any group of persons which belong to any of the following categories:
(a) the same group of undertakings including any parent undertakings, its subsidiary undertakings and affiliate undertakings;
(b) the same business grouping;
(c) a separate economic unit having an independent power of decision where they are controlled, directly or indirectly, by public bodies or state-owned entities.
Comparing the Australian propositions presented in the Position paper that the maximum parcel limit will apply to individual participants, rather than the bid aggregation of a number of participants who are controlled by the same corporation with its European and Californian counterparts there are arguments that the Australian stance in that regard is isolated.
7. SUSPENSION OR CANCELLATION OF AUCTION
Under the Australian cap-and-trade it is proposed that the Regulator will have the authority to suspend or cancel auctions if the Regulator believes that trading or bidding conditions have or did become disorderly or not transparent, including through system failure, mistaken bidding or non-compliance with the auction rules. It is proposed that an auction can be suspended for up to three hours to allow the Regulator to carry out investigations, during which time bids will remain in place. The auction will resume if the suspension is lifted within the three hour time period, but will be cancelled if suspended for more than three hours. The auction can also be cancelled any time before settlement.
Cancellation of an auction will only have effect if the cancellation is announced prior to settlement. All bids will be null and void. The Regulator may defer settlement for up to five business days pending investigation whether an auction should be cancelled. The Regulator will determine whether to hold a replacement auction, within seven days of the cancelled auction.
As was said at the beginning the time-line for submissions on Position paper lapses 24 February 2012. In the mid-2012 it is envisioned the publication of the exposure draft of the legislative instrument for auctioning Australian carbon units. It is to be seen whether by that time the Australian Government will stand by the above assumptions for the details of future auctioning system or changes the approach for some particular items.