On 28 December 2011, Regulation (EU) No 1227/2011 of the European Parliament and of the Council on the integrity and transparency of the wholesale energy market (hereafter: REMIT) entered into force and is, since that day, directly applicable to all Member States.
The objective of REMIT is to provide a specific European regulatory framework for the wholesale market in order to improve its functioning by preventing and, where appropriate, punishing abuses (market manipulation, attempted market manipulation or insider trading). The aim is therefore to avoid any behaviour leading to unfair competition which would undermine the confidence of energy market participants. In this way, pricing on the wholesale market should be based on a correct interaction between supply and demand.
The Regulation lays down the following provisions:
- the prohibition of insider dealing (Article 3)
- the prohibition of market manipulation or attempted manipulation (Article 5)
- the obligation for market participants to publish inside information (Article 4.1)the obligation to notify through a platform ACER and the national regulatory authority in case of exemption to REMIT :
- linked to a transaction which allows existing contractual obligations to be met or which is made with the agreement of the system operators concerned in order to guarantee the secure and reliable operation of the network (Article 3.4b)
- related to deferred public disclosure of privileged information (Article 4.2)
- the obligation for persons arranging transactions in a professional capacity to make effective provision for detecting breaches of these prohibitions and to notify the CREG of any breaches (Article 15)
- the obligation for national regulatory authorities to notify ACER in case of reasonable grounds for suspicion of acts of infringement of REMIT which take place on its territory or in another Member State (Article 16)
In short, according to this regulation, operators should not :
- engage in insider trading since it is prohibited.
- Manipulate the market since any manipulation or attempted manipulation is prohibited
What does the REMIT Implementing Regulations stipulate?
On 7 January 2015, the European Commission Implementing Regulation (EU) No 1348/2014 on data reporting pursuant to Article 8(2) and (6) of Regulation (EU) No 1227/2011 entered into force.
This Implementing Regulation lays down the rules for the transmission of information to be provided to ACER in the framework of REMIT.
The purpose of this Implementing Regulation is to :
- to define the details of the data concerning wholesale energy products and the basic data to be reported
establish appropriate channels for REMIT reporting information;
- to establish the timing and frequency of REMIT reporting.
The entry into force of this implementing regulation entails two obligations for market participants :
the obligation to register with a national regulatory authority for transactions on the wholesale market subject to declaration to ACER (art 8.1 and 9 of REMIT)
the obligation to report transactions, including orders and fundamental data (Article 8 of REMIT)
What are REMIT's obligations?
Market participants are required to register with the authority of the Member State where they are established. For operators established in Belgium, it is with the CREG that they must register. If an operator is located outside the EU, he must register in the Member State in which he operates.
Market participants must submit the declaration of data on commercial transactions to ACER. Operators may outsource the reporting of transaction data to third parties.
Market participants are required to provide so-called fundamental data to ACER, such as data on the availability and use of generation, storage and transmission facilities that are important to the market.
Market Participants are required to disclose information on insider trading or market manipulation. In certain situations, market participants may delay the publication of certain information but must report this to the CREG and ACER.
What is the scope of REMIT?
REMIT applies to market participants, i.e. any natural or legal person carrying out transactions on wholesale energy markets.
REMIT applies to wholesale trade of energy products. The wholesale energy products concerned are :
- contracts for the supply of electricity or natural gas with delivery within the European Union
- derivatives relating to electricity or natural gas produced, traded or delivered in the European Union
- contracts for the transmission of electricity or natural gas in the European Union
- derivatives relating to the transmission of electricity or natural gas in the European Union
Contracts with end customers do not fall within the scope of REMIT unless their consumption capacity is equal to or greater than 600 GWh per year.
It should be noted that REMIT's prohibitions on market manipulation and insider trading do not apply to wholesale energy products which are also financial instruments subject to the Market Abuse Regulation (MAR). However, they are still affected by the obligation to publish inside information pursuant to Article 4 of REMIT.