PART 2Auction Design
Auction clearing price7.
(1)
The auction clearing price is—
(a)
the price of the bid at which the sum of the volumes bid matches or exceeds the volume of allowances auctioned;
F1(b)
where the sum of the volumes bid is less than the volume of allowances auctioned, the price of the lowest bid; or
(c)
where paragraph (2) applies, the price of the lowest bid that is not significantly below the prevailing secondary market price.
F2(1A)
But where paragraph (2) applies and every bid is significantly below the prevailing secondary market price—
(a)
an auction clearing price must not be determined; and
(b)
the allowances intended for auction must be dealt with in accordance with regulation 6(8).
(2)
This paragraph applies where the auction clearing price determined in accordance with paragraph (1)(a) F3or (b) would be significantly below the price on the secondary market prevailing during and immediately before the bidding window, taking into account the short term volatility of the price of allowances over a defined period preceding the auction, F4as determined in accordance with the methodology decided on under paragraph (4).
F5(3)
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(4)
Before F6the opening of the bidding window of an auction, the appointed auction platform must decide on the methodology to determine F7for the purposes of paragraph (2) the prevailing secondary market price and whether a given price is significantly below the prevailing secondary market price, (“the paragraph (2) methodology”), after consulting the auctioneer, and notifying the FCA.
(5)
In between two bidding windows, the appointed auction platform may modify the paragraph (2) methodology, after consulting the auctioneer, and notifying the FCA.
(6)
If the appointed auction platform modifies the paragraph (2) methodology it must notify the FCA and the auctioneer without delay.