uropean Union Allowance (EUA) -is it a tool for climate protection, or just a new acronym on the interbank market?The events of the first and second settlement periodhave shown many weaknesses and imperfections ofthe greenhouse gas emission allowance tradingsystem. It is difficult to predict what might happen inthe third settlement period, when allowances will start being distributed through an auction system.Therefore, the actions of the European Commission areaimed at shifting the burden of trade risk andresponsibility onto individual member states. Is this agood solution? How does that happen? Commission Regulation (EU) No 1031/2010 of 12November 2010, relating to trading in greenhouse gasemission allowances, defined four new "products":forwards, futures, two-day spots and five-day futures.In Article 3 (1)(1), the Regulation defines auctionedfutures as a financial instrument, similarly to forwardsand five-day futures, which means a change in theclassification and a change of the market for tradinggreenhouse gas emission allowances, which, to date,have been sold as commodity. Until the aforementioned Regulation comes into force,allowances remain part of the commodity market, andare subject to the Commodity Exchange Act. Movingforward, only two-day spot contracts will be subject tothe Act. The remaining three products will be subjectto directive 39/2004/EC of the European Parliamentand of the Council of 21 April 2004. The directive,commonly referred to as MiFID (Markets in FinancialInstruments Directive) lays down the rules for tradingin "financial instruments". It was implemented intothe Polish law as part of the Financial Instruments Act. Financial instruments, according to the MiFIDdirective, mean options, futures, swaps, forwards andother derivative contracts relating to emissionallowances. These contracts can be settled physicallyor in cash. It should be remembered that the MiFIDdirective classifies as financial instruments also othercontracts, as long as they demonstrate the propertiesof other financial derivatives. This regulation endedspeculation whether a given product is a financialinstrument or not. The change in the classification of emissionallowances leads to moving the allowance trade fromthe commodity exchange to the stock exchange, whichalso means the change of the entities dealing with thismarket. At the moment, it is difficult to say how long itwill take for the entities that deal with the securitiesmarket to adjust to the commodity sector and theenergy market. It should be noted that the changestaking place in the carbon market will be quiteproblematic for many entities. According to the Commodity Exchange Act, theexchange members are entities that produce, sell orbuy electric energy, purchase energy certificates orpurchase greenhouse gas emission allowances. In linewith the new regulations, the trade in emissionallowances will take place through financialinstitutions, i.e. brokerages, banks, foreign investmentcompanies, and not, as to date, directly on theexchange or directly between individual enterprises. As the Trading in Financial Instruments Act requiresthe possession of an appropriate permit, entities bothpurchasing and selling financial instruments,regardless of whether doing so on their own behalf oron behalf of another entity, as well as enterpriseswilling to trade in allowances will have to obtain suchEMISSION ALLOWANCES ASA FINANCIAL INSTRUMENTCOMMODITY 072AND EMISSIONS TRAININGEPAWEL JANKOWSKI,COMMODITY TRADER, CONSUS S.A.?