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Sleeve trade (REMIT definitions)
European Union Electricity Market Glossary



The necessity to indicate whether the counterparty to the trade is a "Sleeve" (S) applies for the REMIT transactions and orders reporting purposes (Data Field No 12) when the trade was executed as an electronic or voice assisted trade on broker platforms.


According to the ACER’s Trade Reporting User Manual (TRUM) sleeve trade definition is the following: a market participant (A) would like to enter into a transaction with another market participant (B) which has advertised a price and quantity on the broker's screen.


However, because market participant A and B do not have an agreement to trade (or limited credit status), the broker may find a third market participant (C) who has an agreement to trade with both A and B and is willing to sleeve the trade (buy and sell the same contract simultaneously) for them.


There are two trades in this type of scenario: one trade between A and C (e.g. A buys from C) and another trade between C and B (e.g. C buys from B).


The result of the sleeve trade is four legs to be reported to the ACER as follows: A buys from C:

- A reports the trade as buyer and as aggressor (A); and

- C reports the trade as seller and as sleeve trade (S).


C buys from B:

- C reports the trade as buyer and as sleeve trade (S); and

- B reports the trade as seller and an initiator (I).


This field does not apply to orders to trade.


It is noteworthy that some sleeves may qualify as the so-called Persons Professionally Arranging Transactions (PPAT) and some are beyond this scope.


The difference hinges on whether the broker taking part in the sleeve trades on behalf of other market participants (if he does so, he is a PPAT).


The above distinction is reflected in the ACER Guidance on the application of REMIT, which in the analysis of selected entities vis-à-vis the PPATs’ characteristics (p. 58) differentiates between:


1. Sleeves (arranging transactions) i.e. PPATs (bringing about transactions by offering a service to act as an intermediary to sell or to purchase commodities, on behalf of other market participants, that do not have an agreement to trade with each other), and

2. Sleeves (not arranging transactions) i.e. beyond the scope of PPAT (entering into transactions to allow the sale or purchase of commodities between other market participants that do not have an agreement to trade, without trading on behalf of those market participants).




Last Updated on Friday, 09 August 2019 13:48


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