|Back office alert - OTC contract admitted to trading at the organised market place|
|Monday, 25 April 2016 05:09|
Do you still deliberate how often the list of organised markets must be checked?
- standard contracts are reported with the use of the Table 1 of the Annex to the Commission Implementing Regulation No 1348/2014 (Reportable details of standard contracts for the supply of electricity and gas (Standard reporting form)),
- non-standard contracts are reported with the use of the Table 2 of the said Annex (Reportable details of non-standard contracts for the supply of electricity and gas (Non-standard reporting form)).
Second important feature of standard contracts under the REMIT reporting scheme is they are reportable on a T+1 day basis (while the mandatory deadline for non-standard contracts is T+1 month).
This differentiation of respective deadlines for reporting of standard and non-standard contracts becomes administratively non-manageable at the moment when a contract previously reported as non-standard contract is admitted to trade at an organised market place.
As was observed by market participants, they "may need some time before they are able to report their transactions on a T+1 day basis rather than on a T+1 month basis".
Given no implementation period is envisioned by law on such occasions, transactions have to be reported instantly in case a non-standard contract becomes part of the list of standard contracts (i.e. on a T+1 basis instead of a T+30 basis).
Sometimes it may not be physically possible for market participants to change the infrastructure for reporting in one day to become compliant.
The gravity to the above complication is added by the fact that all standard contracts have to be reported on a T+1 basis independent of the market they were traded on (organised market place or OTC).
ACER referred to this inconsistency by saying that "market participant should make their best efforts to minimise the time they need to start reporting the contract on a T+1 day basis".
While this empathy on the part of the EU energy regulator should be appreciated, it can't be assessed as a fully legitimate solution. The EU legislators should enact express provisions which are viable for its addressees.
At this juncture, the said ACER's stance can be treated as a some sort of a "comfort letter".
However, it inevitably entails the risk of subjective assessment, which actions fulfil the criterion of "best efforts" and which do not.
Moreover, this discretion on the part of the authorities does not contribute to legal certainty in the energy market.
To conclude, the entire case represents a drastic example how the law shouldn't be enacted.
I really do appreciate the authorities' market-oriented compassion but what if I don't want to beg for the authorities' mercy but would like to merely obey the law?