|Wholesale energy market under the REMIT Regulation|
REMIT Regulation refers to "wholesale energy markets" in multiple places, the title of the Regulation notwithstanding, Article 1(1) thereof lays down that REMIT "establishes rules prohibiting abusive practices affecting wholesale energy markets", Article 5 (providing for the prohibition of market manipulation) also puts this into the context of "wholesale energy market", the definition of "inside information" in Article 2(1)(c) mentions, among others, "information which is required to be disclosed in accordance with legal or regulatory provisions at Union or national level, market rules, and contracts or customs on the relevant wholesale energy market", and so on.
According to Recital 5 of REMIT, wholesale energy markets encompass both commodity markets and derivative markets which are of vital importance to the energy and financial markets, and price formation in both sectors is interlinked.
Wholesale energy markets include, inter alia, regulated markets, multilateral trading facilities, over-the-counter (OTC) transactions and bilateral contracts, direct or through brokers.
ACER in its 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 gave the following examples of wholesale energy markets (non-exhaustive list):
- Derivatives markets relating to electricity or natural gas produced, traded or delivered in the Union, including financial OTC markets;
Pursuant to ACER, in future, also generation capacity markets (CRM) "may have to be considered".
In the Agency's view (presented in the Annex III to the Trade Reporting User Manual (TRUM, p. 1, 2), "a wholesale energy market is a market where the energy "commodity" or the "derivative" related to the commodity is physically traded (i.e. it physically changes hands/ownership) and not necessarily the venue where the transaction is agreed. Therefore it is important to clarify that:
a. The energy exchanges, broker platforms and any other facilities where the commodity is negotiated (traded) are Organised Market Places in REMIT terms. These venues are used to arrange/negotiate the transactions (the contracts);
b. For contracts for the supply (and transportation) of gas or electricity in the EU (including futures for the physical delivery) the wholesale energy market is the place where the energy commodity changes ownership (it is traded) e.g. a defined gas hub/electricity network where the gas or electricity changes hands; and
c. For financial derivatives contracts related to EU wholesale gas and electricity products, the venue i.e. the organised market place that hosts that contract, with its clearing house and clearing members, is the wholesale energy market. In this case the wholesale energy market is the place where the derivative contract is traded, e.g. a specific venue with its own rules and arrangements (including clearing house and clearing members)."
Wholesale energy market in numbers
According to the ACER’ presentation (2nd Energy Market Integrity and Transparency Forum, Ljubljana, 6 and 7 September 2018) the EU wholesale energy market exhibits the following activity per day:
- collected organised market place trade records: 250.000,
- number of registered organised market places (OMPs): 73,
REMIT Regulation, Article 2(6)
|Last Updated on Saturday, 06 October 2018 12:25|