|Obligation to publish inside information under REMIT|
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This means that information deemed as inside information must be made available to the public and they should include assets' information, but they may be not limited to these.
Disclosure obligation under Article 4 of REMIT should be distinguished from the reporting requirement in line with Article 8 thereof, which introduced the obligation to provide the Agency for the Cooperation of Energy Regulators (ACER or "Agency") with a record of wholesale energy market transactions (Article 8(1)), including orders to trade ('transaction reporting') and the obligation to report fundamental transparency information (Article 8(5)).
However it should be noted that the transaction reporting under Article 8(1) of REMIT is not subjected to public disclosure and the access thereto is retained only to national regulators and ACER.
Personal scope of application - market participants, parent and related undertakings and undertakings under control or operational responsibility
The obligation to disclose inside information lies with the market participant according to Article 2(7) of REMIT.
However, the disclosure obligation relates not only to inside information in respect of the market participant's own business or facilities, but also to inside information of the market participant's parent undertaking or related undertaking.
In addition, the disclosure obligation is not only related to inside information in respect of business or facilities which the market participant or the respective undertakings owns, but also in respect of inside information they control or for whose operational matters that market participant or undertaking is responsible, even in part only.
Article 4(3) of REMIT extends the disclosure obligation of Article 4(1) of REMIT to a person employed by, or acting on behalf of, a market participant receiving the inside information in the normal course of the exercise of their employment, profession or duties as referred to in Article 3(1)(b) of REMIT.
If so, that market participant or person shall ensure simultaneous, complete and effective disclosure of that information.
However, this paragraph does not apply if the person receiving the information has a duty of confidentiality, regardless of whether such duty derives from law, regulation, articles of association or contracts.
In the ACER's opinion, the limitation of this exception to Article 4(3) of REMIT is considered to mean, in contrary, that no such exception applies to market participants in relation to parent undertakings or related undertakings according to Article 4(1) of REMIT.
Inside information disclosure thresholds
UK Ofgem communication of 11 July 2014 highlighted that under REMIT "there are no thresholds for the disclosure of inside information. Instead market participants' conduct will be assessed against the definition of insider information under REMIT Article 2(1)."
Acknowledging the fact of application of indicative thresholds by some market participants in their internal compliance processes, Ofgem (as well as ACER in its third edition of REMIT Guidance) refrained from publishing any thresholds.
The said application of indicative thresholds by market participants in their internal compliance processes seems even to be the regulators' preferred option, as ACER referred in its Guidance to firms' market experience, but also, responsibility.
Also in the Document of 8 September 2015 Prohibition of market abuse under the Regulation on wholesale energy market integrity and transparency (EU) No 1227/2011 (REMIT) Ofgem reiterates that under REMIT there are no thresholds for the disclosure of inside information, but market participants' conduct consisting in using thresholds (for operational efficiency reasons) to determine whether to make a REMIT notification, will be assessed against the definition of inside information under REMIT Article 2(1).
Ofgem stresses, moreover, whether or not a piece of information is covered by this definition is likely to depend on market conditions at the relevant time.
The content of the REMIT publication pursuant to ACER guidance and implementing regulation
ACER's Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency made a recommendation on the information the REMIT publication should and mustn't contain (see boxes).
It is noteworthy, the ACER Guidance defines a minimum set of information required for publication, regardless of whether the information is published on a transparency platform or on the market participant's website.
The aforementioned Ofgem communication of 8 September 2015 recommends market participants should publish their notifications in such a way as to ensure they are easy to understand.
To this end, Ofgem encourages market participants to consider publishing an inside information "factsheet" to explain any part of their notification procedures/assumptions.
Ofgem observes, some market participants have already taken this approach. In the Ofgem's opinion this aids transparency as an integral part of REMIT.
As regards the collection of inside information by the ACER, Article 10(1) of the Commission Implementing Regulation No 1348/2014 of 17 December 2014on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (OJ L 363, 18.12.2014, p. 121 - "REMIT Implementing Regulation") establishes further requirements in order to allow the Agency to efficiently collect inside information for market monitoring purposes.
Under Article 10(1) of the REMIT Implementing Regulation, market participants disclosing inside information on their websites, or service providers disclosing such information on market participants' behalf, must provide web feeds to ACER.
Moreover, in line with Article 10(2) of the REMIT Implementing Regulation, when reporting information on transactions and fundamental data, including the reporting of web-feeds on the disclosure of inside information, the market participant is required to identify itself or be identified by the third party reporting on its behalf using the ACER registration code, which the market participant received, or the unique market participant code that the market participant provided while registering in accordance with Article 9 of REMIT.
Common schema for REMIT publications
Another important step towards the standard setting in the area of REMIT mandatory transparency was ACER's Public Consultation Paper of 27 May 2015 (PC_2015_R_03) REMIT Common Schema for the Disclosure of Inside Information.
Impact on carbon permit prices
In the above Consultation Paper ACER recommended, REMIT publication schema should include, among others, the field "impact on carbon permit prices".
The European energy regulators's intention was to allow readers of the Urgent Market Message (UMM) to evaluate the impact of the event on carbon permit contracts.
ACER underlined, moreover, adding this field "is the first step for websites and platforms, to be able to disclose inside information according to the Market Abuse Regulation standards avoiding double publication of the same inside information".
The indication of likelihood of having significant effect on the price of emission allowances or actioned products based thereon had been proposed in the said Consultation Document as the optional information only.
This was, presumably, on account of practical difficulties in assessing carbon price impacts of particular events relating to electricity production assets. It is often argued carbon price tendencies are mainly driven by macroeconomic data as well as politics, and not by individual circumstances (see for example EURELECTRIC response to the ACER Consultation Document, June 2015).
Annex VII to the REMIT MoP on transaction data, fundamental data and inside information reporting (version of 30 September 2015) exhibits, ACER at present decided not to include the field relating to carbon prices' impact in the REMIT inside information schema, while ACER's annual report on its activities under REMIT in 2014 (p. 66) lists the "establishment of appropriate mechanisms to access emission allowances data" among the deprioritised ACER's activities/deliverables.
Another point recommended by ACER for disclosure in the REMIT publication schema was "Decision Time". ACER gave an example of the company's management board resolution on the production plan of a power plant for the year ahead that included maintenance periods.
ACER argued, the traders of the same asset owner should be aware of the maintenance periods at the time of publishing of the UMM together with the rest of the interested public. According to this example, the management board decided on the maintenance plan on Date1 and the UMM was published later on Date2. The traders of the same company and the public would be informed on Date2, therefore the Decision Time (Date1) has to be publicly known on Date2.
Decision Time disclosure duties may, however, entail procedural complexities involved with identifying exact date for the relevant decision in the course of decision-taking processes within market participants' organisational structures, particularly within corporate groupings (the issue accentuated equally by the above EURELECTRIC Response).
Version of 30 September 2015 of the Annex VII to the REMIT MoP on transaction data, fundamental data and inside information reporting evidences that ACER at present did not include the field relating to the "Decision Time" in the REMIT inside information schema.
Annex VII to the MoP on data reporting
The aforementioned ACER's consultations effected in the ACER's adoption of the Annex VII to the REMIT Manual of Procedures on transaction data, fundamental data and inside information reporting (MoP on data reporting), version of 30 September 2015.
In order to define the web feed standard for the disclosure of inside information, ACER developed three different XML schemas accommodating all types of inside information.
I. "Unavailabilities of electricity facilities" - This schema should be used when market participants publish UMMs reporting planned or unplanned electricity unavailabilities of any size that are likely to significantly affect wholesale energy prices.
II. "Unavailabilities of gas facilities" - This schema should be used when market participants publish UMMs reporting planned or unplanned gas unavailabilities of any size that are likely to significantly affect wholesale energy prices.
III. "Other market information" - This schema should be used when market participants publish UMMs that do not fall under type I. or II. Typically these are events that are likely to significantly affect wholesale energy prices but are less structured and less frequent by nature than unavailabilities of facilities (for example: reporting corporate or market developments, commissioning a new power plant etc.).
For the detailed description of specific fields as mandated by Annex VII to the MoP see the attachment below.
The updated 3rd edition of ACER's REMIT Guidance states that market participants should ensure inside information is published as soon as possible, but at the latest within one hour if not otherwise specified in applicable rules and regulations.
The aforementioned Ofgem communication of 8 September 2015 echoes this position.
Additionally, Ofgem considers that disclosing inside information to other market participants, including affected stakeholders, prior to public disclosure may constitute a breach of REMIT Article 3(1)(b).
As Ofgem underlines, market participants should take account of REMIT Articles 3(1)(b) and (c) whenever considering sharing potential inside information or discussing products potentially affected by inside information.
The number of platforms for the disclosure of inside information is growing, nevertheless they are still not available in all EU Member States, which effects in that in some Member States market participants publish inside information only on their websites.
The regulatory stance regarding both of the above publication channels is as follows:
1. Transparency platforms
ACER in its guidelines expressed a clear preference for discharging an obligation to publish inside information under REMIT through transparency platforms (for instance operated by Transmission System Operators or energy exchanges), "if such platforms exist".
If a transparency platform is used which discloses inside information in a timely manner, ACER considers a simultaneous publication on the market participant's website not necessary.
The state of play is that the central platform is not available at European level at present, thus the creation of national platforms for the publication of inside information in compliance with art. 4 of REMIT is theoretically possible. There are also available transparency platforms established by energy exchanges e.g. Nord Pool Spot and EEX Transparency platform, mentioned in ACER guidelines.
In view of these developments and considering the existence of transparency platforms like Nord Pool Spot and EEX there may arise some ambiguities whether the publication of inside information on the market participant's own website is currently allowed in light of ACER guidelines.
However, the hypothetical thesis that ACER's regulatory measure like guidelines may force market participants from all EU Member States to publish their inside information through Nord Pool Spot or EEX transparency platforms does not appear reasonable.
This dilemma will, likely, loose, its sharpness over time as the number of transparency platforms increases continously (ACER's annual report on its activities under REMIT in 2014 (p. 52 and 55) observes the Agency is aware of eight platforms for the disclosure of inside information for electricity in various Member States of the Union and seven for gas, while ACER' List of Inside Information Platforms, as visited on 2 December 2015, lists, non-exhaustively, nine transparency platforms for electricity and eight transparency platforms for gas).
2. Market participant's website
The publication of inside information on the market participant's own website has been allowed by ACER, under some conditions however.
The condition precedent pursuant to ACER guidelines thereunder market participant is allowed to publish inside information on its website is that the adequate transparency platforms do not yet exist.
If the said condition is not met, the publication of inside information on the market participant's own website may be effected simultaneously to a publication through a platform - thus as a additional publication channel.
Hence, market participants may disclose inside information on their own website either as a fall-back option or simultaneously to a disclosure of inside information through an inside information platform, however, regulatory guidelines appear to treat the publication of inside information on the market participant's own website as an interim measure, moreover, allowed only unless otherwise specified.
Other regulatory requirements for using market participant's website as a REMIT inside information publication channel:
a) format of the publication:
- facilitating the consolidation of the information with similar data from other sources;
b) fees for making inside information available - free of charge;
c) language of the publication: official language(s) of the relevant Member State and in English or in English only;
d) social media use: only as additional sources not replacing website publications.
Moreover, pursuant to the REMIT Implementing Regulation No 1348/2014, market participants disclosing inside information on their website or service providers disclosing such information on market participants' behalf are required to "provide web feeds to enable the ACER to collect these data efficiently" (Article 10).
To read more on this thread see Our REMIT magnifying glass - check whether your transparency website uses RSS feed!
3. Responsibility for transparency platform delays or technical failures
On the occasion of explaining the role and mutual interrelations of transparency platforms and market participants' websites in fulfilling the obligation to publish inside information under REMIT, the European energy market regulator has also made an important clarification on the scope of market participants' responsibility for transparency platform delays or technical failures.
The two key facts were in the first place acknowledged: that market participants bear the ultimate responsibility for the disclosure of inside information, however, they do not have an influence on the operation of transparency platforms.
To account for the above circumstances, in the ACER's opinion market participants are not responsible for temporary technical problems of such platforms fulfilling the RIS requirements. The crucial determination made by regarding that occasion is that if the information was transmitted to the transparency platform in time, the market participant should not be charged for having breached the obligation to disclose inside information.
If technical problems persist market participants have to use other platforms or their own website instead.
The key reservation is however, that although delayed disclosure of inside information due to technical problems of transparency platforms does not imply a breach of the disclosure obligation, the market participant is not allowed to trade based on that information as long as it is not available to the market.
4. Regulatory developments regarding inside information publication channels
ACER presentations (see "Effective disclosure of inside information according to Article 4(1) of REMIT" by Tommy Johansson) highlighted the possibility for a European register containing information on where all market participants publish their inside information.
This register would be established by ACER with the use of data submitted by market participants to ACER under Article 9(1) of REMIT, where as part of their registration under REMIT, market participants are required to provide information on where they publish inside information (ACER Decision no 01/2012).
Based on the information provided by market participants to national regulatory authorities, ACER is able to establish a European register of market participants and may decide to make extracts of that European register available to the public (Article 9(3) of REMIT).
The above ACER's initiative should be appreciated. Such a common European database, available via the Internet, containing the specification of all websites under which market participants publish their inside information, would represent a great added value to the European energy market.
The important merit of this database is the list of the above websites would be sourced from submissions made by market participants at issue to national regulatory authorities, hence the risk that the relevant data is fed accidentally is minimised.
Archives of REMIT historic inside information
Historic inside information should remain available on the market participants' website if not remained available by the inside information platform for a period of at least 2 years. This is to allow other market participants to learn best practice disclosure and to assess previous incidents of the same facilities.
Article 4(2) of REMIT provides for an exemption from the obligation to timely publish inside information in a number of specified cases.
Publication of inside information may be delayed by the market participant under the the fulfilment of the following, cumulative preconditions:
1. the delay the public disclosure of inside information may follow only exceptionally, hence it mustn't amount to a regular and common market practice of a market participant,
2. market participant must be able to indicate its concrete legitimate interests that would be prejudiced If the information was not delayed,
3. such omission must not be likely to mislead the public,
4. the market participant is able to ensure the confidentiality of that information,
5. market participant is not allowed to make decisions relating to trading in wholesale energy products based upon that information,
6. the relevant information should be reported to the ACER and the relevant national regulatory authority without delay and include justification (in order to assist in fulfilling these obligations ACER has developed standard format for notification of delayed information - see below),
7. the decision to delay publication is a market participant's own responsibility, thus in case of potential legal challenge market participant bears the burden to demonstrate that all the above conditions are met and is exposed to all the consequences if he fails to do so.
It is noteworthy that Article 3(4)(b) of REMIT provides also for an exemption from the prohibition to trade on inside information before it is published (details in that regard see here).
The relevant electronic form - Delayed Information Notification Platform - is available via the ACER's REMIT Portal and can be used by market participants to comply with their notification obligations according to Articles 4(2) and 3(4)(b) of REMIT towards both the ACER and National Regulatory Authorities (NRAs).
Pursuant to ACER's annual report on its activities in 2012 there were 1 058 notifications of delayed disclosure of inside information received in 2012 from across Europe.
In 2014, the Delayed Information Notification Platform received 354 notifications on Article 3(4)(b) of REMIT, and 281 notifications on Article 4(2) of REMIT (ACER's annual report on its activities under REMIT in 2014, p. 48).
The aforementioned ACER's annual report on its activities under REMIT in 2012 refers to:
1) one case related to both potential non effective disclosure of inside information according to Article 4(1) of REMIT and potential insider trading according to Article 3(1) of REMIT;
2) five cases related to potential non-effective disclosure of inside information according to Article 4(1) of REMIT.
The case referred to under point 1 above was brought to the Agency's attention through a notification from a competent national regulatory authority (NRA). Since the case potentially had cross-border impact, the Agency established and coordinated an investigatory group consisting of all concerned NRAs.
The competent NRA's review led to the conclusion that the relevant inside information was not disclosed in a timely manner and that the market participant therefore was in possession of inside information when carrying out trading activities at day-ahead and intraday markets.
The market participant may have applied the exemption in Article 3(4)(b) of REMIT, but since it did not comply with the reporting obligation of this exemption, the market participant was formally in breach of Article 3 of REMIT.
However, in the absence of sanctioning rules at national level and since no actual price effect of the trade could be concluded, the market participant was informed on how to improve its compliance with REMIT requirements and only a statement of breach was issued.
Among five additional cases related to potential non-effective disclosure of inside information according to Article 4(1) of REMIT the two were taken up either by the Agency or the relevant NRA because of notifications of delayed disclosure of inside information and the three were taken up by the Agency following stakeholder contacts.
In all these cases, the Agency worked with the concerned NRA which in turn contacted the concerned market participant. All cases were closed without a breach of REMIT being found.
ACER in its report also indicates, it was repeatedly contacted regarding insufficient information published on events generating inside information. This concerned inter alia Urgent Market Messages (UMM) from market participants on company websites.
In most cases, requests were considered as Q&As and not considered as cases.
However, when a request was considered as a case, the Agency reviewed the relevant UMMs and requested additional background information about the market participant's trading behaviour and potential price effects either from the NRA concerned or from a competent market surveillance team from an organised market place concerned if considered useful.
In most cases, the Agency found that the incident was not in conflict with REMIT. In the cases where the incident, indeed, was in conflict with REMIT, it had no effect on the market.
In the latter case, it was normally agreed with the competent NRA that it identifies the elements of compliance that should be improved by the market participant in order to better meet REMIT requirements in future and the review of the case at stake was closed without further action.
ACER concludes the above review of the enforcement cases with the opinion that it expects that the number of cases under review will grow in the following years, in particular following the start of systematic data collection on the basis of the implementing acts.
In turn, UK Ofgem communication of 11 July 2014 notes the following shortcomings with regard to wholesale markets participants inside information publications:
- there is significant variation in the type of capacity changes that market participants report; some include the 'normal' capacity, some state the change in capacity, some state the capacity during an event and some include a mixture of all three,
The aforementioned ACER's annual report on its activities under REMIT in 2014 (p. 47) recalls, with respect to the disclosure of inside information duties, the case where the Agency was notified by an NRA about an investigation regarding a potential breach of Article 4 of REMIT.
A market participant was reporting unplanned unavailability of power plants inconsistently and in a way that was not compliant with the guidance established in the ACER Guidance on the application of REMIT.
Some IT requirements included in the guidance (RSS feeds, 2 year history) were disregarded, and some content requirements were missing: timestamp of the publication, history of the publications about the same event.
As the said ACER's report mentions the NRA questioned and interviewed the market participant and the market participant committed to implement the required improvements.
|Last Updated on Tuesday, 04 July 2017 23:19|