Regulation on wholesale energy market integrity and transparency

REMIT introduces a legislative framework tailored to the European energy sector, which was not covered until now, preventing market abuse. Launched in 2011 by the European Parliament and Commission, Regulation 1227 plays an important role in maintaining a functional energy market.

The actual implementation of REMIT is made through Regulation 1348/2014, that detects and prevents energy market manipulation, a fundamental requirement  for a  functional European market and for maintaining safety of gas supplies in Europe— key components of  the European Energy Strategy.

ACER (Agency for Cooperation of Energy Regulators) ensures the implementation of  REMIT with the help of National Agencies of the member states. Therefore ACER elaborated a series of manuals and guidelines published on their website, continuously updated.  

Cronology

January 2015— Regulation 1348/2014 enters into force. Energy market participants have to  register with the European Register of Market Participants  receiving subsequently an ACER code that certifies the  compliance with REMIT requirements. In the absence of a  code  the right to trade energy products is lost.

7 October 2015– starting date of reporting transactions concluded on organized markets and loading fundamental data (information on the capacity and use of production systems, storage, transmission and consumption) by ENTSO-E and ENTSO-G.

7 January 2016 (90 days from the beginning of reporting) - deadline for reporting all transactions executed at organized markets outstanding at the beginning of the reporting (backloading)

7 April 2016  - reporting of transactions concluded outside organized markets, transmission contracts and fundamental data by the TSO (Transmission System Operators) and SSO (Storage System Operators)

7 July 2016 (90 days from the beginning of reporting)- deadline for reporting all transactions executed outside organized markets  outstanding at the beginning of the reporting (backloading)

Agency’s REMIT Information System

Is the Agency’s IT system for data collection, data sharing, and automatic screening and monitoring of trading activities in energy products .

The Agency shall ensure the confidentiality, integrity and protection of the information collected under REMIT .

CEREMP

Centralized European Register of Wholesale Energy Market Participants is the   European register with all the participants to the wholesale energy market of the European Union. Member states may chose to register directly or in the National Register kept by the National Regulatory Authority , such register is synchronized to the European one. Further to registration, participants are granted an ACER identification code  that allows them to trade energy products.

ACER activity on implementing REMIT :

  • Implementation phase: the Agency develops IT mechanisms  and procedures for efficiently monitoring of the wholesale energy market 

  • 28 December 2011– 7  July 2016

  • Operational phase:

    Data collection, screening of information and identification of potential abuses . This phase started already as of  7 January 2015, once Regulation  1348/2014 entered into force.

    Transition phase:

    Between  7 October 2015–7 July 2016 the two phases overlap and ACER uses all endeavors to ensure implementation and monitoring at the same time

  • Information TO BE REPORTED:

  • Standard contracts for electricity and gas => a contract concerning  any wholesale energy product admitted to trading at an organized market place, irrespective of whether or not the transaction actually takes place on that market place. Both the concluded transactions and the placed orders  with all the subsequent modifications have to be reported.

    Non-standard contracts for electricity and gas => a contract concerning any wholesale energy product that is not a standard contract

    Fundamental data => information related to the capacity and use  of facilities for production, storage, consumption or transmission of electricity and natural gas , including planned or unplanned unavailability of these facilities.

    ENTSO-E and ENTSO-G report fundamental data on the capacity and use of facilities for gas transmission through the central platform of EU.

    SSO shall report to the Agency and, at their request, to national regulatory authorities for each storage facility information through a joint platform on the contracted and available capacity, injection and extraction, planned or unplanned unavailability announcements.

    Transmission contracts are reported by TSO and contracts concluded on the secondary market  or derivatives are reported by market participants. 

    PPackage for the REMIT USER:

    1. List of organized markets according to Art 3(2) of the Implementing Regulation

    2. List of standard contracts according to Art 3(2) of the Implementing Regulation 

    3. TRUM— Transaction Reporting User Manual 

    4. MoP–  Manual of Procedures on transactions and fundamental data reporting  

    5. Requirements and characteristics of a RRM (Registered Reporting Mechanism)

    As a conclusion, the manuals listed at point 3 and 4 above are the WHAT, HOW and WHEN  it should be reported.

    ACER is continuously updating this package whenever necessary. 

    Romgaz registered with the National Register of Wholesale

    Energy Market Participants on 26.06.2015 receiving the ACER code:

    A00019361.RO

    RISKS

    · Not complying with the conditions for publishing inside information

    · Not complying with the obligation to report transactions may raise suspicion on a potential market abuse and may determine additional investigation and sanctions

    · Sanctions as a result of breaching the prohibition of market manipulation

    STORAGE SYSTEM OPERATORS

    Shall report to the Agency and, at their request, to national regulatory authorities for each storage facility following information through a joint platform:

    (1) the technical, contracted and available capacity of the storage facility

    (2) amount of  gas stored at the end of the gas day,  injections and withdrawals

    (3) planned and unplanned unavailability announcements of the storage facility including the time of the announcement and the capacities concerned.

    These information shall be made available not later that the following working day, and the information related to point 3, including their update, shall be published as soon as these become available.

    Tracking the effect of an information on the price

    · The same information type had in the past an effect on the price

    · Existing analyst reports or publications and opinions of specialists indicating that this type of information may impact on the price

    · The market participant or another person has previously classified this type of information as inside information

    It is worth mentioning that these are only indicators and must not be   taken as final for the interpretation of information. The market participant may choose if the information is an inside information and has to be made public. Experience will highlight the variety of information and ACER believes that the definition of inside information shall evolve in time.

    In order to comply with the obligations under REMIT the following measures have to be taken: existing informational flow has to be identified, the processes to comply with REMIT are adapted, internal procedures are implemented in compliance with the structure of the company.

    The REMIT conformity manual could be structured as follows:

    A. Identify the existing informational flow, information management and the inside information at the company, adapting the processes of the informational flow :

    Identification and interpretation of inside information

    Detailed list of potential inside information

    Identification of potential sources of information

    Preparing an information control procedure to establish the information type and the automated measures related to their administration (quarantine, publication, etc.)

    Identifying the affected persons

    Defining the duties of the REMIT responsible person and the authority to make decisions

    Defining general responsibilities and authority to make decisions

    Preparing the regulation on publishing inside information and the communication procedures

    Presenting the informational flows and connections

          B. Procedures for the company related  to the restrictions for preventing market manipulation 

    Identify the risk and the place where possible abuses may occur and define the market manipulation attempt and the use of inside information ;

    Elaborate and implement internal procedures to clearly define  how to identify and tackle  potential abuses;

    Define the market manipulation attempts and the sanctions applied therefore

      C. Elaborate the action plan in case of potential inspections of the NRA

      D. Full description of the transaction reporting obligations 

    Create systems that ensure ad hoc, unplanned, periodical, planned reporting

    Define the content of the reported data, the proper reporting channels, the reporting moment

    Setting organizational and technical measures to transmit data

    Personalize processes and include in the job description of each employee (who, what, where, how and when is information managed)

     E. Accreditation procedure as RRM in order report transactions on behalf of own clients (upon request)

    Considering the importance of reporting, the complexity and the risks related to nonfulfillment of obligations, our company has internal and control procedures to ensure an accurate, precise and full data reporting.

    Inside information means information of a precise nature which has not been made public, which relates, directly or indirectly, to one or more wholesale energy products and which, if it were made public, would be likely to significantly affect the prices of those wholesale energy products.

     Information shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to do so, and if it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of wholesale energy products;

    “Information” means:

    · information which is required to be made public in accordance with Regulations 714/and 715/2009, including guidelines and network codes adopted pursuant to those Regulations;

    ·  information relating to the capacity and use of facilities for production, storage, consumption or transmission of electricity or natural gas, including planned or unplanned unavailability of these facilities; 

    · information which is required to be disclosed in accordance with legal or regulatory provisions at Union or national level, market rules, and contracts or customs on the relevant wholesale energy market, in so far as this information is likely to have a significant effect on the prices of wholesale energy products;

    · other information that a reasonable market participant would be likely to use as part of the basis of its decision to enter into a transaction relating to, or to issue an order to trade in, a wholesale energy product.

    Information on transparency versus inside information:

    Information on transparency is usually periodical, planned  and subject to  Reg. 714/2009 EC and 715/2009/EC.

    Inside information  is considered to occur ad hoc and may impact on the wholesale energy price. 

    Information has to be made public either by means of the transparency platform or by other means, irrespective of who is making it public (the market participant or a third party) as long as it reaches the public. It has to reach the “target public” (here the energy market participants) at the same time so that they can equally benefit from it (sectorial publicity).

    MARKET MANIPULATION examples:

    1. Entering into any transaction or issuing any order to trade in wholesale energy products which:

    · gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products;

    · secures or attempts to secure, by a person, or persons acting in collaboration, the price of one or several wholesale energy products at an artificial level, unless the person who entered into the transaction or issued the order to trade establishes that his reasons for doing so are legitimate and that that transaction or order to trade conforms to accepted market practices on the wholesale energy market concerned;

    · employs or attempts to employ a fictitious device or any other form of deception or contrivance which gives, or is likely to give, false or misleading signals regarding the supply of, demand for, or price of wholesale energy products

    2. Disseminating information through the media, including the internet, or by any other means, which gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products, including the dissemination of rumours and false or misleading news, where the disseminating person knew, or ought to have known, that the information was false or misleading.

    3. When information is disseminated for the purposes of journalism or artistic expression, such dissemination of information shall be assessed taking into account the rules governing the freedom of the press and freedom of expression in other media, unless:

    · those persons derive, directly or indirectly, an advantage or profits from the dissemination of the information in question;

    · the disclosure or dissemination is made with the intention of misleading the market as to the supply of, demand for, or price of wholesale energy products;

    Romgaz, as producer, supplier, operator of the storage system, distributor, beneficiary of transmission contracts, acting both on and outside  the organized market for natural gas and electricity shall have to make a complex reporting.

    https://www.acer-remit.eu/portal/home

    ANRE, designated by the Agency, supports market participants on matters related to registration and compliance with   REMIT regulations.

    ANRE is in close connection with ACER  and is responsible for the investigations it has to perform in case ACER detects suspicious activities.

    COOPERATION AT  EUROPEAN LEVEL

    ACER envisages a harmonized and solid approach to prevent and detect market manipulation. It ensures that National agencies fulfil their tasks in compliance with REMIT.

    In this respect, ACER cooperates with National Agencies, ESMA and competent financial authorities of the member states, and with Competition Councils, as the case may be. Moreover, ACER may conclude cooperation agreements with certain organized markets.

    Competent authorities may use the data received further to such agreements to prepare statistics, analyses and forecasts.

    The implementation procedure of the cooperation is described in MoUs (Memoranda of Understanding). The MoUs with National Agencies are multilateral and the MoU with ESMA and organized markets is bilateral.