Emissions trades listed on the Chicago Climate Futures Exchange (CCFE) were originally modeled as physicals creating problems with present value mark-to-market (MTM) valuation and settlement resulting in double discounting of MTM.
Our consultant identified the problems and applied business knowledge to design a solution that eliminated the valuation problem. The consultant performed extensive testing, which resulted in converting the affected trades to futures transactions.
The solution eliminated the “double discounting” on the PV MTM and permitted proper settlement at the termination of the contract. All stakeholders were completely satisfied with the changes and gained a renewed confidence in the group’s problem solving capabilities.