The revised Regulation on Wholesale Energy Market Integrity and Transparency which entered into force on May 7, 2024, is set to introduce significant changes to the European energy markets sector on November 8, 2024. These changes aim to enhance market integrity, transparency, and competition.
There are two things that start on November 8:
- The requirement that persons professionally executing transactions (PPETs) submit suspicious transaction or order reports (STORs).
- The requirement for non EU Market Participants, resident or established in third countries, to appoint a designated EU presentative.
Reporting obligation by PPETs
The revised REMIT introduces a definition of persons professionally arranging or executing transactions (PPAETs) as: “A person professionally engaged in the reception and transmission of orders for, or in the execution of transactions in, wholesale energy products.”
Under the revised REMIT, PPAETs have an obligation under Article 15 paragraphs 1 and 2 to notify the Agency for the Cooperation of Energy Regulators (ACER) and the relevant national regulatory authorities about any potential breaches of Articles 3 (insider trading), 4 (non-disclosure of inside information) or 5 (actual or attempted market manipulation) of REMIT.
The obligations for persons professionally arranging transactions (PPATs) under Article 15(1) became applicable on May 7, 2024. However, the obligations for persons professionally executing transactions (PPETs) under Article 15(2) will start to apply from November 8, 2024.
Monitoring and surveillance
PPAETs will have to establish and maintain effective arrangements, systems and procedures to identify potential breaches of REMIT prohibitions.
They will also need to ensure that employees carrying out surveillance activities are preserved from any conflict of interest and act in an independent manner when detecting and reporting suspicious orders and transactions.
Aviv Handler, managing director at ETR Advisory, commented: “The new requirement for in scope Professional Persons Executing Transactions to submit STORs when appropriate means that Energy Regulators will be able to hold Market Participants accountable for such notifications.”
Designated representative
Wholesale gas and electricity market participants, who are not resident or established in the EU, must designate a representative in the EU and register in a Member State in which they are active. They will have until November 8, 2024, to designate a representative authorized to act on behalf of the market participant.
The designated representative is intended to be a point of contact for ACER or the national regulatory authority on all issues necessary for the receipt of, compliance with, and enforcement of decisions or requests for information issued in relation to the revised REMIT.
Next steps
Following the publication of the revised REMIT in the Official Journal in February 2024, ACER published a series of open letters which covers various aspects of implementation, including practical details such as how to notify of the use of algorithms, a change in obligation of reporting of on venue activity and the requirement to notify NRAs of suspicious activity. The letters with links are set out below:
- Open letter dated September 25, 2024 on the designation of representatives by non-EU market participants and on the new obligations of persons professionally arranging or executing transactions (PPAETs), according to the revised REMIT.
- Open letter dated July 30, 2024 on the notifications of algorithmic trading and direct electronic access according to the revised Regulation (EU) No 1227/2011.
- Open letter dated April 17, 2024 on the implications of the revision of Regulation (EU) No 1227/2011 on REMIT data reporting aspects and notification obligations.
ACER encourages all participating firms to read these letters in addition to the revised REMIT.
By the end of 2024 ACER aims to revise the existing ACER Guidance on the application of REMIT to reflect the changes stemming from the revised REMIT reform and provide a more comprehensive interpretation of the different elements incorporated in the REMIT revision.
ACER also plans on issuing guidelines and recommendations as per mandates received under revised REMIT, but has not committed to any specific timeframes.
In case of further questions on the new or revised obligations, ACER invites market participants and/or PPAETs to contact ACER through the REMIT query form.
