How REMIT Will Affect You

Friday, 24 May 2013
By Susan Drury

There are currently some major regulatory shifts taking place within the energy trading industry, designed to restrict market abuse. One of the many regulations which has recently come into play is REMIT (Regulation on Energy Market Integrity and Transparency), a legislation that could have a direct effect on your company due to the parameters put in place by the European Parliament.

The EU legislation has a number of key components including:

  • The explicit banning of market abuse in the form of market manipulation, attempted market manipulation and insider training within the wholesale energy market.
  • The requirement for market participants to regularly publish price sensitive information.

REMIT has been introduced and will be regulated by ACER (Agency for the Cooperation of Energy Regulators), who will act on behalf of the EU; Ofgem (the UK’s national regulatory authority) will assist with monitoring and development.

Anyone who trades in the Wholesale Energy Market will have to comply with the rules. Although it is uncertain when they will officially come into play, it could be as early as 2014/15.

Currently, the specific guidelines have not yet been established, but believe that it will include the identification of any wholesale energy products that have been bought and sold, as well as the price and volume. Institutions should also be prepared to provide comprehensive details of any transactions including the seller, buyer and beneficiary (if different). The required information must be provided in an effective and timely manner to avoid incurring a possible penalty.

Much of this information could potentially overlap with the reporting requirement of EMIR (European Market Infrastructure Regulation). However, ACER hopes to avoid any duplicated information by removing the requirement to submit the information to both EMIR and ACER.

The reporting will need to be made by either the market participant or a third party acting on behalf of the company via a trade reporting system, organised market or trade matching system.

Note: This article was authored by April Orchid, a close follower of UnaVista, the global hosted platform for all matching, validation and reconciliation needs, who is immersed in financial regulations and the latest news on the stock markets.

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