FNSFMK512 - Apply knowledge of emissions markets assessment tool

Assessor Resource

FNSFMK512
Apply knowledge of emissions markets

Assessment tool

Version 1.0
Issue Date: July 2024

This unit describes the skills and knowledge required to participate in and provide specialist advice on defined financial products in the emissions markets.

It applies to individuals who use specialised knowledge (including the mandatory knowledge outlined in ASIC RG146 Appendix A2.11), analytical skills and systematic approaches to manage the provision of advice to clients.

Work functions in the occupational areas where this unit may be used are subject to regulatory requirements. Refer to the FNS Implementation Guide Companion Volume or the relevant regulator for specific guidance on requirements.

You may want to include more information here about the target group and the purpose of the assessments (eg formative, summative, recognition)

Evidence Required

List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.

ELEMENT	PERFORMANCE CRITERIA
Elements describe the essential outcomes.	Performance criteria describe the performance needed to demonstrate achievement of the element.
1. Comply with regulatory framework unique to emissions markets	1.1 Identify domestic and international regulatory framework within which emissions reduction schemes are placed 1.2 Identify key legislation, regulation and industry codes of practice relevant to operating within Australian emissions markets 1.3 Comply with relevant legal and regulatory principles when operating in emissions markets 1.4 Discuss regulatory risk for both voluntary and regulated emissions markets, and determine possible impacts of pending regulatory or legislative change
2. Evaluate scope and impact of emissions markets	2.1 Identify regulated and voluntary carbon markets and outline how they operate 2.2 Distinguish respective supply and demand drivers for voluntary and regulated markets 2.3 Describe price drivers for emissions products 2.4 Differentiate participants in carbon markets and motivations for their participation 2.5 Distinguish functions of primary and secondary emissions markets 2.6 Discuss auction types and processes 2.7 Describe functions, requirements and rules for registries
3. Identify types of emissions products, their characteristics and liabilities	3.1 Compare different types of emissions products and instruments traded in compliance and voluntary markets 3.2 Identify key features of compliance market products 3.3 Describe risks inherent within each product and their potential impact in given context 3.4 Describe transactional processes for each product, including acquiring, transferring and surrendering 3.5 Describe tax treatment of emissions products, including deductibility of costs where relevant
4. Apply knowledge of emissions products	4.1 Determine relevant information influencing the market 4.2 Analyse relevant information when selecting products for emissions markets transaction 4.3 Devise strategies for using emissions market products 4.4 Seek advice, guidance and specialist expertise when required 4.5 Apply knowledge of financial market transactional processes when operating in emissions markets 4.6 Complete relevant documentation and complete any additional organisational processes
5. Maintain emissions market knowledge	5.1 Review relevant emissions trading markets sources regularly and apply any changes in daily work 5.2 Maintain professional competence in market knowledge in accordance with codes of conduct and/or organisational requirements 5.3 Implement processes for maintaining up-to-date knowledge of relevant aspects of emissions trading markets

Evidence of the ability to:

research, analyse and update information, including regulatory changes impacting on emissions markets and operations

provide and apply specialist knowledge relating to emissions markets to daily work.

Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.

To complete the unit requirements safely and effectively, the individual must:

analyse and describe types of products and their characteristics including:

types of emissions units, and their characteristics (encompassing carbon units, Australian carbon credit units and eligible international emissions units)

characteristics of emissions units including their status as personal property, and how they are typically derived from inception to the point of acquiring status as a financial product

risks associated with each type of emission unit, including rating, restrictions on their use, transfer and bankability for future use

processes for acquiring, transferring and surrendering emissions units, including compliance with the requirements of the Australian National Registry of Emissions Units

outline the operation of regulated and voluntary carbon markets including:

geopolitical context of carbon markets, including the influence of political and economic factors and corporate social responsibility

main participants in carbon markets, and their key objectives and participation behaviours as factors influencing market activity

emissions unit supply and demand factors and regulated price factors influencing market activity and prices

issue of carbon units via auction, and auction types

types of transactions in carbon markets, including transactions relating to the carbon pricing mechanism and in voluntary markets, and the function of financial markets facilitating such trading (including internationally)

potential trading strategies and their implementation in carbon markets (e.g. hedging and investment strategies)

risks associated with carbon markets, including liquidity, pricing, credit, operational and regulatory risks

carbon market transaction documentation, including documentation used for different types of counterparties and transactions, their key terms and conditions, and advantages and disadvantages

explain the regulated emissions legal environment including disclosure and compliance, covering:

domestic regulatory framework for the carbon pricing mechanism, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

domestic regulatory framework for the Carbon Farming Initiative, including the role of the Clean Energy Regulator and the Australian National Registry of Emissions Units

international regulatory framework for carbon trading, including the Clean Development Mechanism

relevant legal principles (e.g. Corporations Act, ASIC Act, Privacy Amendment (Private Sector) Act, Australian National Registry of Emissions Units Act, National Greenhouse and Energy Reporting Act, Carbon Credits (Carbon Farming Initiative) Act, Clean Energy Act)

the relationship between ethical and regulatory requirements (e.g. good faith, utmost good faith, full disclosure of remuneration and/or fees and any other conflicts of interest that may influence the adviserâ€™s recommendation), and the application of these requirements in professional practice

relevant industry standards and codes of conduct

regulatorsâ€™ guidelines, including ASIC Regulatory Guide (RG)146 requirements

dispute resolution procedures (external and internal)

outline the taxation obligations in the emissions market including:

taxation treatment of emissions units and taxation issues relating to emissions units

deductibility of costs associated with emissions units.

Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial markets field of work and include access to:

office equipment, technology, software and consumables

emissions markets information.

Assessors must satisfy NVR/AQF assessor requirements.

Submission Requirements

List each assessment task's title, type (eg project, observation/demonstration, essay, assingnment, checklist) and due date here

Assessment task 1: [title] Due date:

(add new lines for each of the assessment tasks)

Assessment Tasks

Copy and paste from the following data to produce each assessment task. Write these in plain English and spell out how, when and where the task is to be carried out, under what conditions, and what resources are needed. Include guidelines about how well the candidate has to perform a task for it to be judged satisfactory.

ELEMENT	PERFORMANCE CRITERIA
Elements describe the essential outcomes.	Performance criteria describe the performance needed to demonstrate achievement of the element.
1. Comply with regulatory framework unique to emissions markets	1.1 Identify domestic and international regulatory framework within which emissions reduction schemes are placed 1.2 Identify key legislation, regulation and industry codes of practice relevant to operating within Australian emissions markets 1.3 Comply with relevant legal and regulatory principles when operating in emissions markets 1.4 Discuss regulatory risk for both voluntary and regulated emissions markets, and determine possible impacts of pending regulatory or legislative change
2. Evaluate scope and impact of emissions markets	2.1 Identify regulated and voluntary carbon markets and outline how they operate 2.2 Distinguish respective supply and demand drivers for voluntary and regulated markets 2.3 Describe price drivers for emissions products 2.4 Differentiate participants in carbon markets and motivations for their participation 2.5 Distinguish functions of primary and secondary emissions markets 2.6 Discuss auction types and processes 2.7 Describe functions, requirements and rules for registries
3. Identify types of emissions products, their characteristics and liabilities	3.1 Compare different types of emissions products and instruments traded in compliance and voluntary markets 3.2 Identify key features of compliance market products 3.3 Describe risks inherent within each product and their potential impact in given context 3.4 Describe transactional processes for each product, including acquiring, transferring and surrendering 3.5 Describe tax treatment of emissions products, including deductibility of costs where relevant
4. Apply knowledge of emissions products	4.1 Determine relevant information influencing the market 4.2 Analyse relevant information when selecting products for emissions markets transaction 4.3 Devise strategies for using emissions market products 4.4 Seek advice, guidance and specialist expertise when required 4.5 Apply knowledge of financial market transactional processes when operating in emissions markets 4.6 Complete relevant documentation and complete any additional organisational processes
5. Maintain emissions market knowledge	5.1 Review relevant emissions trading markets sources regularly and apply any changes in daily work 5.2 Maintain professional competence in market knowledge in accordance with codes of conduct and/or organisational requirements 5.3 Implement processes for maintaining up-to-date knowledge of relevant aspects of emissions trading markets