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Frequently Asked Questions (‘FAQs’) on REMIT transaction reporting

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FAQs on transaction reporting – Introduction

This Frequently Asked Questions document (hereafter referred to as ‘FAQ document’) contains questions received in relation to the Agency’s Transaction Reporting User Manual (TRUM) pursuant to Article 5(2) of Commission Implementing Regulation (EU) No 1348/2014. The TRUM explain the details of the reportable information in relation to standard and non-standard contracts for the supply and transportation of electricity and gas for the transaction reporting regime under Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (REMIT).

The FAQ document is directed to the public but in no way provides a legal interpretation of REMIT and it does not by any means substitute the TRUM[1].

The questions have been submitted during the past months by various stakeholders to the Agency’s functional mailboxes.

The answers included in this FAQs document have been drafted by the Agency and have been previously discussed with stakeholders in roundtable meetings and webinars organised by the Agency. The Agency will update this FAQ document on a regular basis.

The Agency strongly recommends stakeholders wishing to address questions linked to transaction data reporting to only use one channel, the online REMIT query form available at:  https://www.acer-remit.eu/forms/remit-query-form/.

The Agency also publishes Guidance to assist National Regulatory Authorities (NRAs) in carrying out their tasks under REMIT in a coordinated and consistent way. The Guidance is updated from time to time to reflect changing market conditions and the experience gained by the Agency and NRAs in the implementation and application of REMIT, including through the feedback of market participants and other stakeholders.

Market participants have to bear in mind that they have to comply with the obligations and the prohibitions established in REMIT. The Agency recommends that in complying with REMIT, market participants should make their own research and set up a compliance system.

All REMIT related documents are published at the REMIT Portal:
https://www.acer-remit.eu/portal/public-documentation

 

Disclaimer:

The questions contained in this FAQ document are genuine stakeholder questions raised with the Agency. The review of the questions carried out by the Agency has been strictly focused on their anonymisation with the aim of eliminating references made to company names, products or any other items that could be clearly linking to the sender of the question. The Agency does not bear any responsibility concerning the grammar, spelling and notion of the questions included in this document.


[1] Pursuant to Article 5(2) of Commission Implementing Regulation (EU) No 1348/2014, the Agency shall explain the details of the reportable information in relation to standard and non-standard contracts for the supply and transportation of electricity and gas in a user manual and after consulting reporting parties make this user manual available to the public upon the entry into force of the Implementing Acts. On this basis, the Agency has prepared the Transaction Reporting User Manual (TRUM). The TRUM focuses primarily on providing guidance on how to report Wholesale Energy Products.

FAQs on transaction reporting – Question II.1.1.1

Reference to documents: Section 3.4.2 of the REMIT TRUM on Page 31

“Details of standard contracts, including orders to trade, shall be reported no later than on the working day following the conclusion of the contract or the placement of the order. Any modification or the termination of the concluded contract or the order placed shall be reported no later than the working day following the modification or termination”.

OMPs, Market Participants and RRMs need further clarification regarding the definition of a “Working Day” for management of their internal systems.

Further clarification is also needed for ACER in relation to their expectations of, “the next working day”

OMPs such as XXX Futures EU and XXX Spot (collectively “the Exchanges”) operate in multi-time-zone markets and their established support systems and processes are configured accordingly. The Exchanges use trading days with each trading day corresponding to an underlying processing day. The Exchanges appreciates that a trading day may not have the same definition as a “Working Day”.

The Exchanges request that ACER confirm that it is happy to accept that the below as being in conformance with the definition of a “Working Day”.

XXX has identified the following “processing window” times;

faqs-on-transaction-reporting-question-ii-1-1-1-table

These times correspond with the XXX’s internal systems. XXX believes that these processing day times should be compatible with ACER’s definition of a “working day”.

Furthermore, taking into consideration that REMIT reportable data should be reported on the next working day, please could ACER clarify whether it is happy to receive REMIT data on the following basis.

faqs-on-transaction-reporting-question-ii-1-1-1-table2

These times take into account the various necessary maintenance windows for the Exchanges markets.


Answer:

Working days should be understood as business days rather than the exchange trading days. This implies that bank holidays are not working days.

RSS_Icon Last update: 08/09/2015  

FAQs on transaction reporting – Question II.1.1.2

The term “Broker” is mentioned when defining Organised Market Places; that is, a Broker is considered an Organised Market Place. Elsewhere in TRUM there is the term “Executing Broker”. We consider our company an Executing Broker, as we execute client orders. Do these two terms, “Broker” and “Executing Broker” somehow overlap? Is an Executing Broker considered an Organised Market Place?

We would be grateful if ACER could clarify what is meant by “a Person Professionally Arranging Transactions”, so we might decide if we are a PPAT or not. This is relevant for us, as to our understanding the Organised Market Place obligations apply to PPAT’s, so if we are a PPAT we would have to have market surveillance etc.


Answer:

The Agency considers a broker a person or a firm that arranges transactions between a buyer and a seller for a commission when the deal is executed. This is not necessarily an Organised Market Place (OMP). Please see Article 2(4) of Commission Implementing Regulation (EU) No 1348/2014 for the OMP definition. Broker platforms are mentioned as examples for OMPs, but this does not mean all brokers automatically have to be considered as OMPs. This will only be the case if they fulfil the OMP criteria stipulated in Article 2(4) of Commission Implementing Regulation (EU) No 1348/2014.

An example of a broker who is not an executive broker would be a person facilitating deals between a buying and a selling side and then passes the names to both so that they can confirm a bilateral trade without the engagement of the broker.

An executing broker is a firm that executes deals on behalf of its clients on an OMP. An executing broker places an order and executes it without bringing together buying and selling side. The executing broker would not be an OMP.

However, in some circumstances, a brokerage firm (when considered a REMIT OMP) may offer the service of executing broker to their clients. The firm is providing two different services: one as OMP and one as executing broker. For the executing broker business the firm will be considered a REMIT market participant (please see Annex III to the TRUM available on the REMIT portal). This firm should register its executing broker business (and only that) as market participant with the relevant National Regulatory Authority.

With regard to Person Professionally Arranging Transactions definition, please see Question II.3.7 in 10th edition of the Agency’s Q&A on REMIT available on the REMIT portal.

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.1.1.3

We have a query regarding the reporting of give up trades.

The question is whether we need to report the original executing counterpart for these trades. We ask as these trades are given up almost instantly so we do not always record the original counterpart (as they are not our counterpart for risk management purposes etc.).


Answer:

The Agency understands that the question above refers to members of the exchanges that give up their trades. In this case the Agency believes that members of the exchanges that give up their trades are REMIT market participants and they should report their trades. They can do it in two ways:

  • reporting two trade reports: one transaction executed on the exchange and one transaction as a back-to-back trade with their client; or
  • reporting one trade report: one trade report which includes their client information in the Beneficiary ID field (8) if the client is a REMIT market participant.

 

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.1.1.4

Article 11(2) of the REMIT Implementing Regulation

We would like to kindly ask you for a clarification regarding reporting of transactions made at an organised market place in case the transaction order is placed through a broker (which in Poland is a legal requirement for transaction done at the power and gas exchange in case the trading party is not an exchange member itself).

In case a market participant places an order on a power and gas exchange through a broker, than the broker is the counterparty to the transaction made at the exchange. In such a situation

a. is the broker a “market participant” as defined in Article 2(7) of REMIT and should the broker register itself as a market participant with the national regulatory authority?

b. who is the market participant responsible for reporting the transaction to ACER? Is it the market participant who placed the order through the broker or is it the broker?


Answer:

With regard to the above question, if:

1)    a market participant places an order on an electricity and/or gas exchange through a broker (usually an executing broker); and

2)    the broker is the counterparty to the transaction made at the exchange

the executing broker is a REMIT market participant and has reporting obligations for all its trades and orders to trade placed on the exchange, including those that the broker gives up. Please see also Annex III to the TRUM.

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.1.1.5

Our Exchange, approximately every 6 months, runs regulated auctions for acquiring gas.

Auctions are created and organised through the passing of a resolution of a public administrative authority. These auctions are not freely produced at any time, they only happen periodically subject to the terms and conditions set by the mentioned Resolution.

Several vendors, previously qualified according to Rules approved by a public administrative authority, freely submit bids. There are two types of auctions:

  • In the first type, run one each year, cushion gas is bought for its use in the new gas storage sites to be put into operation during the following year. The amount to be bought is known in advance and the participants present complex bids of the gas to be sold with different delivery options (Virtual Point, interconnection, GNL, GNL in ships, …). At the moment, there is only one buyer.
  • In the second type, run every 6 months, gas is sold to last resort retailers. The amount is also known in advance, but in this case, the auction is run as descending clock auction with several rounds. Once the results are known the acquired gas is distributed in previously established percentages between the different last resort retailers.

The buyers do NOT submit any bid during the auction and they are previously nominated (e.g Last resort retailers appointed by the Ministry of Industry, Energy and Tourism).This predetermined set of buyers are known before the auction starts and they are obliged to buy the result of the auctions without any chance to refuse it.

The result of the auction will produce bilateral contracts with physical settlement between each of the successful bidding vendors and each of the buyer but just only one party (the sellers) have been able to determine the price of the contracts, having the other party (the buyer) the obligation to accept it according the results of the auction.

In any case, XXX Exchange does not participate in the settlement, payment, collaterals or management of these contracts.

As there is not a many-to-many trading possibility (because only the sellers submit bids), these auctions do not comply with the definition of organised market place (Article 2(4) of the REMIT Implementing Regulation). So, XXX Exchange does not have to report orders and trades and is not obliged to offer these services to the participants. Participants have to report on their own, but just only the final bilateral contracts that were created at the end of the auction.


Answer:

From the Agency’s point of view, the TRUM, available on the REMIT Portal, already addresses this question on page 15. If the Auction is not a multilateral system or any other system or facility in which multiple third-party buying and selling interests in wholesale energy products are able to interact in a way that results in a contract and therefore not an Organised Market Place (which has to be assessed by the person who runs the Auction), then the orders should not be reported. However, any trade concluded in such a platform has to be reported in Phase 2 (7 April 2016) as any other bilateral contract.

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.1.1.6

Quarterly multi-round ascending clock auction sponsored by the Country A NRA and organized by XXX Exchange. This auction brings together one instrument seller against multiple buyers. Although this trading system (one-to-many) does not seem to fit the Agency’s understanding of an organised market place, the guidance from the NRA is that the results of these auctions should be reported anyway, presumably because the subject of the auction are standard contracts also admitted to continuous trading in XXX Exchange.

These contracts are futures and should be reported as per article (3)(1)(a)(viii) of Commission Implementing Regulation (EU) No 1348/2014, using Table 1. The structure of this table supports the reporting of a list of contracts, transactions and orders, but does not natively support some properties of these auctions (initial/closing price per round, demand/supply surplus per round, exit prices defined by agents, etc.).

How should these types of auctions be reported in REMIT?

The reporting model for standard contracts should accept the characteristics of clock auctions. In particular, we refer:

  • the possibility of several rounds;
  • the definition of a round opening price and a round closing price for each round;
  • the definition of intermediate price points defined by bidders, between the round opening price and the round closing price.

Answer:

From the Agency’s point of view, the TRUM, available on the REMIT Portal, is already addressing this question on page 15. If the Auction is not an Organised Market Place (which has to be assessed by the person who runs the Auction), then the orders should not be reported. However, any trade concluded in such a platform has to be reported in Phase 2 (7 April 2016) as any other bilateral contract.

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.1.1.7

We assume that it is always the exchange member who is considered to be the market participant and therefore reported as counterparty. This includes those exchange members that do not use their membership for prop trading, but to provide DMA to their customers.

In such a setup, what would be the status of such a customer?

Would he also be considered a market participant?

If this is the case, he would also have a reporting obligation. How would this be fulfilled?

Can we assume that this customer would not need to report transactions in the standard format (because this is what the exchange member already does)?

Does this mean that the customer would need to report non-standard transactions, with the exchange member being the other counterparty?

We assume that a customer, who is not an exchange member, but trading via DMA of an exchange member, is also considered a market participant.

Reporting of the exchange trade in the standard format will be done for the exchange member. The customer will need to report a second transaction in the non-standard format.


Answer:

From the Agency’s point of view, this question is already addressed in the TRUM and explained into detail in Annex III to the TRUM available on the REMIT Portal.

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.1.1.8

Are Virtual Gas Storage contracts reportable under REMIT?


Answer:

Insofar as virtual gas storage contracts are not contracts for the supply (or transportation) of natural gas, they are not reportable under REMIT.

However, contracts for the supply of natural gas within storage and LNG facilities are reportable contracts. For instance, when market participant A sells gas to market participant B within a storage or LNG facility, transferring the ownership of the gas, this is a reportable contract.

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