London, 16th January 2011: Trayport®, provider of energy trading solutions to traders, brokers and exchanges worldwide, in collaboration with Sapient Global Markets, a provider of services to financial and commodity markets, have today published their regulatory whitepaper entitled: “Implications of REMIT for energy brokers”.
REMIT (Regulation on Energy Market Integrity and Transparency) came into force on 28th December 2011. It is possibly the most significant of the new European regulations to affect the wholesale European energy markets, bringing new regulatory burdens for the brokerage community in the form of: transaction reporting, data quality, market surveillance and compliance systems.
REMIT calls for firms to register with their national regulator and to provide detailed transaction records to the European Agency for the Cooperation of Energy Regulators (ACER); For ease, there is a summary of REMIT objectives below.
Trayport fully backs the objectives of REMIT and believes they will be good for the market in the long term. In the short term, however, ambiguities still need to be clarified, such as reporting requirements and whether they extend to unfulfilled order books, and differentiate between electronic and voice orders. In terms of the market surveillance requirement, ACER needs to provide further explanation about which responsibilities will rest with the brokers, and which will be taken on by ACER itself.
The whitepaper offers suggestions on how brokers can prepare for the implications REMIT. Over the next 12 months, Trayport will introduce a number of new initiatives to help brokers and traders meet the requirements of the new market structure, shaped by these regulatory changes.
Summary of REMIT objectives: REMIT -
- Requires all transactions and fundamental data to be reported to the new pan-European energy market supervisor ACER. Data will be shared with other regulators, such as ESMA and national regulators.
- Prohibits trading on “inside information”. Those possessing “inside information” must make it public and may not trade on it until it is in the public domain.
- Prohibits “market manipulation” or attempting to do so.
- Requires brokers to notify national regulators of any transaction they suspect of having breached the rules prohibiting trading on inside information and to establish and maintain effective arrangements and procedures to identify breaches of rules prohibiting trading on inside information
- Establishes a register of all European Market Participants.
Please find the “Implications of REMIT for energy brokers” whitepaper above.