International Law

Carbon pollution permits to be Australian financial products

A carbon pollution permit (which will be referred to in legislation as an Australian emissions unit) would be an entitlement composed of various ?rights? contained in the carbon pollution reduction legislation. The main rights would be the right to surrender the permit and to transfer it.

A permit could be held and traded by any legal or natural person (subject to verification of identity and measures to prevent criminal activity).

Section 3.3.4 of The Carbon Pollution Reduction Scheme Green Paper discusses whether services provided in relation to permits would be similar to those for financial products such as shares and debentures. Those services include the provision of trading advice, brokerage services, and trading platform and support services.

Permits, like other financial products, could also be the subject of market misconduct, including market manipulation and insider trading.

The government's preferred position is that permits would be a financial product for the purposes of the Corporations Act, but some adjustment to that regime may be required to fit the characteristics of permits. Service providers would be required to hold an Australian financial services licence.

Full post as published by Australian Regulatory Compliance Review on July 16, 2008 (boomark / email).