For the purposes of this Regulation, the following definitions shall apply:

1. 1.

   ‘futures’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Commission Regulation (EC) No 1287/200610, for delivery at an agreed future date at the auction clearing price determined pursuant to Article 7(2) of this Regulation and upon which variation margin calls to reflect price movements are payable in cash;

2. 2.

   ‘forwards’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Regulation (EC) No 1287/2006, for delivery at an agreed forward date at the auction clearing price determined pursuant to Article 7(2) of this Regulation and upon which variation margin calls to reflect price movements may be secured, either through non-cash collateral or by means of an agreed government guarantee, at the option of the central counterparty;

3. 3.

   ‘two-day spot’ means allowances auctioned for delivery at an agreed date no later than the second trading day from the day of the auction, pursuant to Article 38(2)(a) of Regulation (EC) No 1287/2006;

4. 4.

   ‘five-day futures’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Regulation (EC) No 1287/2006, for delivery at an agreed date no later than the fifth trading day from the day of the auction;

5. 5.

   ‘bid’ means an offer in an auction to acquire a given volume of allowances at a specified price;

6. 6.

   ‘bidding window’ means the time period during which bids may be submitted;

7. 7.

   ‘trading day’ means any day during which an auction platform and the clearing system or settlement system connected to it are open for trading;

8. 8.

   ‘investment firm’ means the same as in point (1) of Article 4(1) of Directive 2004/39/EC;

9. 9.

   ‘credit institution’ means the same as in Article 4(1) of Directive 2006/48/EC of the European Parliament and of the Council11;

10. 10.

    ‘financial instrument’ means the same as in point (17) of Article 4(1) of Directive 2004/39/EC unless otherwise stated in this Regulation;

11. 11.

    ‘secondary market’ means the market in which persons buy or sell allowances either before or after they are allocated either free of charge or through auctioning;

12. 12.

    ‘parent undertaking’ means the same as in Articles 1 and 2 of Council Directive 83/349/EEC12;

13. 13.

    ‘subsidiary undertaking’ means the same as in Articles 1 and 2 of Directive 83/349/EEC;

14. 14.

    ‘affiliate undertaking’ means an undertaking linked to a parent or subsidiary undertaking by a relationship within the meaning of Article 12(1) of Directive 83/349/EEC;

15. 15.

    ‘control’ means the same as in Article 3(2) and (3) of Council Regulation No 139/200413 as applied in the Commission’s Consolidated Jurisdictional Notice14. Recital (22) of that Regulation and paragraphs 52 and 53 of that Notice shall apply for determining the notion of control for state-owned undertakings;

16. 16.

    ‘auction process’ means the process encompassing the setting of the auction calendar, the procedures for admission to bid, the procedures for submission of bids, the conduct of the auction, the calculation and announcement of the auction results, the arrangements for payment of the price due, delivery of the allowances and management of the collateral needed to cover any transaction risks, as well as the surveillance and monitoring of the proper conduct of the auctions by an auction platform;

17. 17.

    ‘money laundering’ means the same as in Article 1(2) of Directive 2005/60/EC having regard to Article 1(3) and (5) of that Directive;

18. 18.

    ‘terrorist financing’ means the same as in Article 1(4) of Directive 2005/60/EC having regard to Article 1(5) of that Directive;

19. 19.

    ‘criminal activity’ means the same as in Article 3(4) of Directive 2005/60/EC;

20. 20.

    ‘auctioneer’ means any public or private entity appointed by a Member State, to auction allowances on its behalf;

21. 21.

    ‘nominated holding account’ means one or more type of holding account provided for in the applicable Commission regulation adopted pursuant to Article 19(3) of Directive 2003/87/EC for the purposes of participating in or conducting the auction process including the holding of allowances in escrow, pending their delivery under this Regulation;

22. 22.

    ‘nominated bank account’ means a bank account designated by an auctioneer, a bidder or its successor in title for the receipt of payments due under this Regulation;

23. 23.

    ‘customer due diligence measure’ means the same as in Article 8(1) of Directive 2005/60/EC having regard to Article 8(2) of that Directive;

24. 24.

    ‘beneficial owner’ means the same as in Article 3(6) of Directive 2005/60/EC;

25. 25.

    ‘duly certified copy’ means an authentic copy of an original document that is certified as being a true copy of the original by a qualified lawyer, accountant, notary public or similar professional who is recognised under the national law of the Member State concerned to attest officially as to whether a copy is in fact a true copy of its original;

26. 26.

    ‘politically exposed persons’ means the same as in Article 3(8) of Directive 2005/60/EC;

27. 27.

    ‘market abuse’ means either insider dealing as defined in point (28) of this Article or prohibited in Article 38 or market manipulation as defined in point (30) of this Article or in Article 37(b), or both;

28. 28.

    ‘insider dealing’ means the use of inside information as prohibited pursuant to Articles 2, 3 and 4 of Directive 2003/6/EC in relation to a financial instrument within the meaning of Article 1(3) of Directive 2003/6/EC referred to in Article 9 of that Directive unless otherwise stated in this Regulation;

29. 29.

    ‘inside information’ means the same as in Article 1(1) of Directive 2003/6/EC in relation to a financial instrument within the meaning of Article 1(3) of Directive 2003/6/EC referred to in Article 9 of that Directive unless otherwise stated in this Regulation;

30. 30.

    ‘market manipulation’ means the same as in Article 1(2) of Directive 2003/6/EC in relation to a financial instrument within the meaning of Article 1(3) of Directive 2003/6/EC referred to in Article 9 of that Directive unless otherwise stated in this Regulation;

31. 31.

    ‘clearing system’ means one or more infrastructure connected to the auction platform that can provide clearing, margining, netting, management of collateral, settlement and delivery, and any other services, carried out by a central counterparty, accessed either directly or indirectly through members of the central counterparty who act as intermediaries between their clients and the central counterparty;

32. 32.

    ‘clearing’ means all processes preceding the opening of the bidding window, during the bidding window and following the closing of the bidding window until settlement, involving the management of any risks arising during that interval, including margining, netting, or novation, or any other services, carried out possibly by a clearing or settlement system;

33. 33.

    ‘margining’ means the process by which collateral is to be pledged by an auctioneer or a bidder, or one or more intermediaries acting on their behalf, to cover a given financial position, encompassing the entire process of measuring, calculating and administering the collateral put up to cover such financial positions, intended to ensure that all payment commitments of a bidder and all delivery commitments of an auctioneer or one or more intermediaries acting on their behalf can be met within a very short period of time;

34. 34.

    ‘settlement’ means payment by a successful bidder, or its successor in title, or a central counterparty, or a settlement agent of the sum due for allowances to be delivered to that bidder or its successor in title, or a central counterparty, or a settlement agent, and delivery of the allowances to the successful bidder or its successor in title, or a central counterparty or a settlement agent;

35. 35.

    ‘central counterparty’ means an entity which interposes either directly between an auctioneer and a bidder or its successor in title, or between intermediaries representing them, that acts as the exclusive counterparty to each of them guaranteeing the payment of the auction proceeds to the auctioneer or an intermediary representing it or the delivery of the auctioned allowances to the bidder or an intermediary representing it, subject to Article 48;

36. 36.

    ‘settlement system’ means any infrastructure whether or not connected to the auction platform that can provide settlement services, which may include clearing, netting, management of collateral, or any other services, which ultimately enable the delivery of allowances on behalf of an auctioneer to a successful bidder or its successor in title, and the payment of the sum due by a successful bidder or its successor in title to an auctioneer, carried out through either of the following:

    1. (a)

       the banking system and the Union registry;

    2. (b)

       one or more settlement agents acting on behalf of an auctioneer and a bidder or its successor in title, accessing the settlement agent either directly or indirectly through members of the settlement agent who act as intermediaries between their clients and the settlement agent;

37. 37.

    ‘settlement agent’ means an entity acting as an agent providing accounts to the auction platform, through which accounts instructions for the transfer of the auctioned allowances given by the auctioneer or an intermediary representing it and the payment of the auction clearing price by a successful bidder, its successor in title, or an intermediary representing them are safely executed either simultaneously or nearly simultaneously in a guaranteed manner;

38. 38.

    ‘collateral’ means the forms of collateral security referred to in Article 2(m) of Directive 98/26/EC of the European Parliament and of the Council15, including any allowances accepted as security by the clearing system or settlement system;

39. 39.

    ‘regulated market’ means the same as in point (14) of Article 4(1) of Directive 2004/39/EC;

40. 40.

    ‘SMEs’ means operators or aircraft operators that are small and medium-sized enterprises within the meaning of Commission Recommendation 2003/361/EC16;

41. 41.

    ‘small emitters’ means operators or aircraft operators that emitted 25 000 tonnes of carbon dioxide equivalent emissions or less on average in the three calendar years preceding the year in which they participate in an auction, as determined by their verified emissions;

42. 42.

    ‘market operator’ means the same as in point (13) of Article 4(1) of Directive 2004/39/EC;

43. 43.

    ‘establishment’ means any of the following:

    1. (a)

       place of residence or permanent address within the Union for the purposes of the third subparagraph of Article 6(3);

    2. (b)

       the same as in point 20(a) of Article 4(1) of Directive 2004/39/EC taking into account the requirements of Article 5(4) of that Directive for the purposes of Article 18(2) of this Regulation;

    3. (c)

       the same as in point 20(a) of Article 4(1) of Directive 2004/39/EC taking into account the requirements of Article 5(4) of that Directive for the purposes of Article 18(3) of this Regulation, in the case of persons referred to in point (b) of Article 18(1) of this Regulation;

    4. (d)

       the same as in point (7) of Article 4 of Directive 2006/48/EC for the purposes of Article 18(3) of this Regulation, in the case of persons referred to in point (c) of Article 18(1) of this Regulation;

    5. (e)

       the same as in point 20(a) of Article 4(1) of Directive 2004/39/EC for the purposes of Article 19(2) of this Regulation in the case of business grouping referred to in point (d) of Article 18(1) of this Regulation;

    6. (f)

       F1the same as in point 20(b) of Article 4(1) of Directive 2004/39/EC for the purposes of Article 28(4) and (5), Article 35(4), (5) and (6) and Article 42(1) of this RegulationF2;

44. 44.

    F3‘exit strategy’ means one or more documents determined in accordance with the contracts appointing the auction monitor or the auction platform concerned, setting out detailed measures planned to ensure the following:

    1. (a)

       the transfer of all tangible and intangible assets necessary for the uninterrupted continuation of the auctions and the smooth operation of the auction process by an auction platform’s successor;

    2. (b)

       the provision to the contracting authorities or the auction monitor, or both, of all information relating to the auction process, that is necessary for the procurement procedure for the appointment of the auction platform’s successor;

    3. (c)

       the provision to the contracting authorities, or the auction monitor or the auction platform’s successor, or any combination of these, of the technical assistance that enables the contracting authorities, or the auction monitor or the auction platform’s successor, or any combination of these, to understand, access or use the relevant information provided pursuant to points (a) and (b).