Exchange-for-Physical (EFP)

The Exchange offers an EFP facility for participants in the emissions markets to use the ICE ECX EUA and ICE ECX CER Contracts to mitigate their OTC risk exposures by registering their positions with the Exchange for clearing by ICE Clear Europe.

EFPs help participants to manage their counterparty risk exposures and benefit from the security provided by the Exchange’s delivery mechanism and ICE Clear Europe's financial guarantee.

The two key uses of the EFP facilities are as follows:

1. To permit bilaterally traded physical and paper transactions to be hedged using ICE ECX contracts in a single contingent transaction (e.g. where the seller of a bilateral emissions contract becomes the buyer of an ECX Futures contract and the buyer of a bilateral emissions contract becomes a seller of an ECX Futures contract).

2. To enable holders of OTC swap positions to replace them with the equivalent in ICE Futures Europe contracts.

What are EFPs?

EFPs work on the basis that the counterparties agree that they wish to complement or transfer a natural physical or OTC position with an on-exchange futures position. If the counterparties are Exchange Members, they can advise the Exchange directly, or if not, they will ask their Clearing Member or brokers to arrange for the registration of the transactions with the Exchange on their behalf.

Using the EFP facility allows you to:

• Consolidate OTC and exchange-traded positions in one place;
• Close-out open positions by taking the equal and opposite position in ECX Futures;
• The EFP facility allows Members to register Futures trades linked to physical and forward transactions;
• Maintain positions by rolling-forward a futures position into later contract months; and...
• Utilise the Exchange’s delivery mechanism for ECX Futures to simplify the delivery process and reduce the pressure on your Back Office.

Please download the following document outlining all procedures and rules regarding the use of EFPs

1. Click here to download 

Key points about EFPs

The Exchange Rules contain a number of requirements in relation to EFP:

• All EFPs should be underpinned by an underlying physical transaction – the Exchange may request evidence to support the underlying transaction.
• EFPs may be reported in respect of any contract month during trading hours and up to 30 minutes (17.30) after the close of trading (including last trading day).
• EFP trades must be reported to the designated Exchange official by fax or electronically on the prescribed Exchange form.
• If you are a member, you can register your EFP trades directly by fax or online form.
• If you are not a member but instead trade as an order-router, please ask your Clearing Member to fill in and submit the form for EFP registration.
• Details of all EFP registrations (except for transaction price) for the current day are recorded by Exchange staff and published on ICE Futures Europe electronic trading screen known as webICE.
• The EFP transaction prices are not included in the calculation of the daily settlement prices.
• If the registration price is not at the current market price or is outside those parameters announced by the Exchange from time to time, the Exchange must be satisfied that the transaction is a legitimate use of the facility before registration can take place. The Exchange may request sight of evidence to confirm the legitimacy of the underlying transaction whether by sight of contract notes or otherwise. In any event the Exchange will retrospectively monitor a random sample of accepted EFP/EFSs to ensure that there was a legitimate underlying transaction behind the EFP/EFS.  These parameters are currently at, or within, the following differentials from the previous day's official settlement price: ICE Emission Contracts - Futures: Plus /minus €1.00 or within the high/low range of the day.

How to use EFPs

a) Reporting time limits

Reporting of EFP trades may take place at any time for all eligible Futures and Options Contracts during trading hours and for 30 minutes after the close of the relevant individual Contract (or the close of TRS whatever is the earlier).

On an expiry day of ICE ECX Emission Contracts - Futures, EFPs may only be reported up to 30 minutes after the expiry of the relevant contract month/date.

On the expiry day for all ICE ECX Options, EFSs may be reported up to the end of the designated settlement period of the underlying Futures contract. Further details are set out in Rule F.5 and ICE Futures Europe Trading Procedure 16.

Once an EFP or EFS has been organised the Members must report the EFP or EFS details to the Exchange in accordance with ICE Futures Europe Trading Procedure 16.

EFPs or EFSs may be reported to the Exchange by the entry of the EFP or EFS details to the ICE Block facility (or by any other means determined by the Exchange from time to time).

(ii) Where the EFP or EFS is agreed between two separate Members ("Non-crossed Trade") one of the Members party to a Non-crossed Trade inputs into ICEBlock its own side of the deal (i.e. either the buy or sell side of the trade) alleging the counterparty Member to the deal. The counterparty Member to the deal is required to accept the alleged Non-crossed Trade in ICEBlock. Once the Non-crossed Trade has been accepted by the counterparty it flows through to TRS in the normal manner.

In order to facilitate the swift matching of Non-crossed Trades the submitting Member must complete mandatory Order Reference and Contact Number fields to assist any queries prior to acceptance by the counterparty Member.

Unless otherwise agreed by the relevant Members, Non-crossed Trades shall be entered by the buying Member in respect of Non-crossed Trades in single contract months. All legs pertaining to multi-legged strategy trades should be entered into ICEBlock by the Buyer of the front month.

ICEBlock assigns each new trade a unique deal ID and provides an audit of all actions undertaken on ICEBlock for that particular day.

Only Exchange Members are able to register EFP or EFS trades on ICEBlock, affiliate or group companies may be eligible to trade on behalf of an Exchange Member but only with the specific written permission of that Member which has been received by the Exchange. www.theice.com ICE Futures Europe - March 2008 Page 6

All Exchange Members are eligible to register EFP or EFS trades using ICEBlock but must first apply to the Exchange for access.

The Exchange may check the validity of the EFP or EFS details submitted by the parties to the EFP or EFS. If the Exchange (following consultation, where necessary, with ICE Clear Europe and subject to their right to refuse registration) is not satisfied that all such details are valid, it will void the EFP or EFS. Any decision by the Exchange not to register an EFP or EFS is final. Registration of a transaction does not preclude the Exchange from instigating disciplinary procedures in the event that the transaction is subsequently found to have been made other than in compliance with the Regulations.

The EFP or EFS price and volume will be broadcast to the Market via the ICE Platform.

An EFP is registered with a trade type of ‘E' for all contracts other than the Emission and Utility Contracts where the trade type is "O". An EFS is registered with a trade type of ‘S'.

Further information

These Rules are set out in Section F.5 of the Exchange Regulations. Further information about the use of EFPs in relation to the ICE ECX EUA and CER Futures Contract was provided in ICE Futures Circular 05/87 dated 27 July 2005.

More information about the Exchange’s delivery mechanism can be found in the "User Guide - ECX CFI futures Contract" which is available under Useful Documents on this website.

For more information about EFPs or the ICE ECX EUA and CER Futures Contract, please contact:

Sara Stahl: +44 (0) 20 7382 7804 This e-mail address is being protected from spam bots, you need JavaScript enabled to view it

Jason Pegley: +44 (0) 20 7065 7743 This e-mail address is being protected from spam bots, you need JavaScript enabled to view it