Section 95921 - Conduct of Trade(a) Transfers of Compliance Instruments Between Accounts. (1) Except when a transfer is undertaken by the Executive Officer, the accounts administrator will not register a transfer of compliance instruments between accounts into the tracking system until the administrator receives a transfer request that the Executive Officer has determined meets the requirements of this article. (A) To initiate the process, the primary account representative or an alternate account representative of the source account for the transfer must submit a transfer request to the accounts administrator.(B) The primary account representative or another alternate account representative for the same entity must confirm the transfer request to the accounts administrator within two days of the intitial submission of the transfer request.(C) The primary account representative or an alternate account representative for the destination account must confirm the transfer request to the accounts administrator within the time remaining in the three days following the intitial submission of the transfer request in section 95921(a)(1)(A).(D) The Executive Officer must determine whether the transfer request and the transaction for which the transfer request was submitted meet the requirements of this article based on the information available at the time of approval.(2) The following transfers do not require confirmation by an account representative of the destination account pursuant to section 95921(a)(1)(C). (A) Transfers initiated by the Executive Officer.(B) Transfers between a single entity's holding and compliance accounts.(3) The parties to a transfer will be in violation and penalties may apply if the above process is completed: (A) More than three days after the initial submission of the transfer request; or(B) More than three days after the expected termination date of the transaction agreement for which the transfer request is submitted.(4) Except for transfers between direct corporate associates disclosed pursuant to section 95833, an entity may not submit a transfer request to another registered entity without an existing written or recorded oral transaction agreement between the registered entities authorizing a transfer.(b) Information Requirements for Transfer Requests. The following information must be reported to the accounts administrator as part of a transfer request before any transfer of allowances can be recorded on the tracking system: (1) The following information must be entered into the tracking system for all transfer requests: (A) Holding account number of the source account and identification of two individuals who are the primary account representative and/or alternate account representatives initiating the transfer request.(B) Account number of destination account.(C) Type, quantity, and vintage of compliance instrument.(2) The transfer request must identify the type of transaction agreement for which the transfer request is being submitted, selecting one of the following three types: (A) Over-the-counter agreement for the sale of compliance instruments for which delivery will take place no more than three days from the date the parties enter into the transaction agreement.(B) Over-the counter agreement for the sale of compliance instruments for which delivery is to take place more than three days from the date the parties enter into the transaction agreement or that involve multiple transfers of compliance instruments over time or the bundled sale of compliance instruments with other products.(C) Exchange agreements for the sale of compliance instruments through any contract arranged through an exchange or Board of Trade.(3) A transfer request submitted for an over-the-counter agreement for the sale of compliance instruments for which delivery will take place no more than three days from the date the parties enter into the transaction agreement must provide the following information:(A) Date the entity entered into the transaction agreement.(B) Expected Termination Date of the transaction agreement. If completion of the transfer request process is the last term of the transaction agreement to be completed, the date the transfer request is submitted should be entered as the Expected Termination Date. If there are financial, contingency, or other terms to be settled after the transfer request is completed, the date those terms are expected to be settled should be entered as the Expected Termination Date. If the transaction agreement does not specify a date for the settlement of financial, contingency, or other terms that would be completed after the transfer request is completed, the entity may enter the Expected Termination Date as "Not Specified."(C) Price of the compliance instrument in U.S. dollars or Canadian dollars.(4) A transfer request submitted for an over-the-counter agreement for the sale of compliance instruments for which delivery is to take place more than three days from the date the parties enter into the transaction agreement or that involves multiple transfers of compliance instruments over time or incorporates compliance instrument requirements with other product sales or purchases, must provide the following information:(A) Date the entity entered into the transaction agreement.(B) Expected Termination Date of the transaction agreement. If completion of the transfer request process is the last term of the transaction agreement to be completed, the date the transfer request is submitted should be entered as the Expected Termination Date. If there are financial, contingency, or other terms to be settled after the transfer request is completed, the date those terms are expected to be settled should be entered as the Expected Termination Date. If the transaction agreement does not specify a date for the settlement of financial, contingency, or other terms that would be completed after the transfer request is completed, the entity may enter the Expected Termination Date as "Not Specified."(C) Whether the transaction agreement provides for further compliance instrument transfers after the current transfer request is completed.(D) Whether the transaction agreement provides for transfers of other products.(E) If the transaction agreement specifies a fixed price for the compliance instruments, provide the price in U.S. dollars or Canadian dollars.(F) If the transaction agreement sets the price as a cost base plus a margin, then provide the cost base and the margin.(G) If the transaction agreement does not determine the price using one of the above formats, provide a brief description of the pricing method as well as the price resulting from the pricing method for the specific transfer.(5) A transfer request submitted for an Exchange Agreement must provide the following information: (A) Identify the exchange where the transaction is conducted.(B) Identify the contract description code assigned by the exchange to the contract.(C) Date of close of trading for the contract.(D) Price at close of trading for the contract.(6) If the transaction agreements do not contain a price for compliance instruments, entities may enter a price of zero into the transfer request if the transfer request is submitted to fulfill one of the following transaction agreement types and the entity discloses the agreement type in the transfer request.(A) The proposed transfer is between entities with a direct corporate association.(B) The proposed transfer is from an entity's holding account to its compliance account.(C) The proposed transfer is from a publicly owned utility to an entity or a Joint Powers Authority operating a generation facility as a joint venture with the utility.(D) The proposed transfer is from a public utility to a federal power authority to cover emissions associated with imported power.(E) The proposed transfer is from an electric distribution utility to an entity operating a generation facility under a tolling agreement or other long-term power purchase agreement that does not specify a price or cost basis for the sale of the compliance instruments alone.(F) The proposed transfer results from a transaction agreement that incorporates compliance instrument requirements with other product sales or purchases, and specifies a total cost or cost basis for the transaction but does not specify a price or cost basis for the sale of the compliance instruments alone.(G) The proposed transfer is from a publicly owned utility to an entity (including a Joint Powers Authority of which that utility is a member, or an operating agent acting on behalf of such a Joint Powers Authority) operating a generation facility from which the utility obtains electricity.(H) The proposed transfer is to satisfy a transaction agreement that requires the production of a new ARB-issued offset credit or a transaction agreement to transition an early action offset credit into an ARB-issued offset credit and the transaction agreement does not specify a price for the ARB-issued offset credit.(c) Parties to the transfer request agree to provide documentation about the transaction agreement for which the transfer request was submitted within five days of a request of the Executive Officer. (1) The request for documentation may include the transaction agreement and related transaction confirmations that resulted in the transfer and must be sufficient to verify the information entered by the account representative into the fields required for the transfer request.(2) The Executive Officer will treat the documentation as confidential business information to the extent permitted by law.(d) Transfers Involving Exchange Clearing Holding Accounts. (1) A request to transfer compliance instruments to an exchange clearing holding account will list the exchange clearing holding account as the destination account.(2) All of the compliance instruments received by an exchange clearing holding account must be transferred to one or more destination accounts within five days of receiving them.(3) A request to transfer compliance instruments to or from an exchange clearing holding account does not require confirmation by an account representative of the destination account pursuant to section 95921(a)(1)(C).(4) The entity receiving a transfer from an exchange clearing holding account is solely responsible for violations of the holding limit. If a transfer from an exchange clearing holding account results in a violation of the holding limit then the Executive Officer will prevent the receiving entity from transferring allowances to another entity until the Executive Officer has investigated and determined the cause of the violation. The accounts administrator will allow the entity to transfer allowances to its compliance account if the entity can accommodate them within its limited exemption. If the exchange clearing holding account cannot complete a transfer to a destination account, the operator of the exchange clearing holding account will notify ARB of the circumstances of the transfer within 3 calendar days of the failure to complete the transfer.(e) Protection of Confidential Information. The Executive Officer will protect confidential information to the extent permitted by law by ensuring that the accounts administrator: (1) Releases information on the transfer price and quantity of compliance instruments in a manner that is timely and maintains the confidentiality of the parties to a transfer;(2) Except as needed for market oversight and investigation by the Executive Officer, protects as confidential all other information obtained through transfer requests;(3) Protects as confidential the quantity and serial numbers of compliance instruments contained in individual entity holding accounts; and(4) Releases information on the quantity of compliance instruments contained in compliance accounts in a timely manner that maintains the confidentiality of the identity of account holders.(f) General Prohibitions on Trading.(1) An entity may purchase and hold compliance instruments for later transfer to members of a direct corporate association. However, an entity cannot acquire allowances and hold them in its own holding account on behalf of another entity, including the following restrictions:(A) An entity may not hold allowances in which a second entity has any ownership interest.(B) An entity may not hold allowances pursuant to an agreement that gives a second entity control over the holding or planned disposition of allowances while the instruments reside in the first entity's accounts, or control over the acquisition of allowances by the first entity. Provisions specifying a date to deliver a specified quantity of compliance instruments, or specifying a procedure to determine a quantity of compliance instruments for delivery and/or a delivery date, do not violate the prohibition.(2) A trade involving, related to, or associated with any of the following are prohibited: (A) Any manipulative or deceptive device in violation of this article;(B) A corner or an attempt to corner the market for a compliance instrument;(C) Fraud, or an attempt to defraud any other entity;(D) A false, misleading or inaccurate report concerning information or conditions that affects or tends to affect the price of a compliance instrument;(E) An application, report, statement, or document required to be filed pursuant to this article which is false or misleading with respect to a material fact, or which omits to state a material fact necessary to make the contents therein not misleading; or(F) Any trick, scheme, or artifice to falsify or conceal a material fact, including use of any false statements or representations, written or oral, or documents made by or provided to an entity on or through which transactions in compliance instruments occur, are settled, or are cleared.(G) A fact is material if it could probably influence a decision by the Executive Officer, the Board, or the Board's staff.(g) Restrictions on Registered Entities and Tracking System. If an entity registered pursuant to section 95830 violates any provision specified in this article, or in order to protect the environmental stringency of the California Cap-and-Trade Program, the Executive Officer may: (1) Reduce the number of compliance instruments a covered entity or opt-in covered entity may have in its holding account below the amount allowed by the holding limit pursuant to section 95920;(2) Increase the annual surrender obligation for a covered entity or an opt-in covered entity to a percentage of its reported and verified or assigned emissions above the 30% obligation pursuant to section 95855;(3) Suspend or revoke the registration of opt-in covered entities, voluntarily associated entities, and other entities registered pursuant to section 95830; (A) A registered entity that has had its holding account revoked or suspended may not hold compliance instruments or register with the accounts administrator for another set of accounts in any capacity. If registration is revoked or suspended the entity must sell or voluntarily retire all compliance instruments in its holding account within 30 days of revocation; and(B) If registration is revoked or suspended and the entity fails to sell or voluntarily retire all compliance instruments in its holding account within 30 days of revocation, the accounts administrator will transfer the remaining instruments into the Auction Holding Account for sale at auction on behalf of the entity pursuant to section 95910(d);(4) Limit or prohibit transfers in or out of the holding account; or(h) Information Reporting by Holders of Exchange Clearing Holding Accounts. (1) Holders of exchange clearing holding accounts must make the exchange's transaction records underlying the submission of a transfer request on CITSS available to ARB within 10 calendar days of a request from the Executive Officer.(2) Holders of exchange clearing holding accounts must retain transaction records containing the information listed in 95921(b) for 10 years.(3) Holders of exchange clearing holding accounts are not required to include the information listed in 95921(b)(3), (4), and (6) in transfer requests to the accounts administrator.(i) Transfer Request Deficiencies (1) If the accounts administrator detects a deficiency in a transfer request before it is recorded into the tracking system:(A) The accounts administrator will inform the entities submitting the request that the transfer request is deficient and inform the Executive Officer of the deficiency;(B) The accounts administrator will inform the entity responsible for the deficiency of the specific problem to be remedied.(C) The entities submitting the transfer request may resubmit the request with the deficiency corrected within the time limit set pursuant to sections 95921(a)(1)(C), 95921(a)(3), or 95921(a)(4); and(D) If the entities fail to submit an acceptable transfer request within the time limit, then they must either withdraw the transfer request or submit a new transfer request. Penalties may still apply pursuant to sections 95921(a)(3) or (a)(4).(2) If the accounts administrator detects a deficiency in a transfer request after it is recorded into the tracking system: (A) The accounts administrator will inform the entities submitting the request that the transfer request is deficient and inform the Executive Officer of the deficiency;(B) If the deficiency is based on the information submitted by the representative of the source account, the Executive Officer will inform the submitting representative of the specific deficiency;(C) If the deficiency is a violation of the holding limit, the Executive Officer will inform the primary account representative for the account listed on the transfer request as the destination account of the deficiency; and(D) If the entities that submitted the transfer request cannot correct the deficiency within five business days after notification by the accounts administrator, the Executive Officer may instruct the accounts administrator to reverse the transfer. The correction of the deficiency within five business days ensures the Executive Officer will not immediately reverse the transfer, but does not prevent the Executive Officer from applying penalties for the underlying violations.Cal. Code Regs. Tit. 17, § 95921
1. New section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
2. Amendment filed 8-29-2012; operative 9-1-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 35).
3. New subsection (b)(7) filed 6-24-2013; operative 10-1-2013 (Register 2013, No. 26).
4. Amendment filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).
5. New subsection (b)(6)(H) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
6. Amendment filed 9-18-2017; operative 10-1-2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
7. Amendment of subsections (b)(3)(B), (b)(4)(B), (b)(6)(C), (b)(6)(G), (g) and (h) filed 3-29-2019; operative 3-29-2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13). Note: Authority cited: Sections 38510, 38560, 38562, 38570, 38571, 38580, 39600 and 39601, Health and Safety Code. Reference: Sections 38530, 38560.5, 38564, 38565, 38570 and 39600, Health and Safety Code.
1. New section filed 12-13-2011; operative 1-1-2012 pursuant to Government Code section 11343.4 (Register 2011, No. 50).
2. Amendment filed 8-29-2012; operative 9-1-2012 pursuant to Government Code section 11343.4 (Register 2012, No. 35).
3. New subsection (b)(7) filed 6-24-2013; operative 10-1-2013 (Register 2013, No. 26).
4. Amendment filed 6-26-2014; operative 7-1-2014 pursuant to Government Code section 11343.4(b)(3) (Register 2014, No. 26).
5. New subsection (b)(6)(H) filed 12-31-2014; operative 1-1-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 1).
6. Amendment filed 9-18-2017; operative 10/1/2017 pursuant to Government Code section 11343.4(b)(3) (Register 2017, No. 38).
7. Amendment of subsections (b)(3)(B), (b)(4)(B), (b)(6)(C), (b)(6)(G), (g) and (h) filed 3-29-2019; operative 3/29/2019 pursuant to Government Code section 11343.4(b)(3) (Register 2019, No. 13).