FAQs on transaction reporting – Question II.1.1.33

MP has concerns about reports in which one of his counterparties has changed ACER Code during the organization transition process.

Example:
There is a scenario in which there is a contract between party A and party B (ACER codes: ACER-A1 and ACER-B1 respectively) already reported, and at some point in time party A1 (as a result of organizational rebranding/division) receives a new ACER code (ACER-A2). How should such an event be reported to the Agency? In the form of a modification to the original contract or maybe a cancellation of the original one followed by reporting a new contract?


Answer:

In the Agency’s view, the change of the ACER code is a case of novation. As stated in Question 1.1.26 in the FAQ document, all open trades have to be novated with the name of the new legal entity in order to notify the change of the counterparty to the contract. In order to report a novation, an early termination with the old UTI (Action type “C”) and a new trade with a new UTI (Action type “N”) should be reported. This applies to both sides of the trade/contract.
This is also consistent with the ARIS validation rule available on the Agency’s REMIT portal. A change to Field No (1) ID of the market participant or counterparty is not possible, as this is a key component for the identification of the uniqueness of the submitted report. As a result, it is not allowed to report it as “M” (‘Modify’).

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FAQs on transaction reporting – Question II.1.1.34

Reporting of novation and “novation like” activities.
There are different views in the industry about the reporting process that could require a “novation”. The old contract should terminate when the new contract starts or the new reporting should have the original date of the contract as starting date?


Answer:

In the Agency’s view, the new contract has to be reported with a new date (using Action type “N”), while the old contract has to be terminated (using Action type “C”). Please see also Question II.1.1.17, Question II.1.1.26, and Question II.3.5.6.

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FAQs on transaction reporting – Question II.1.1.29

The TSO in AAA, XXX, shows the occurred imbalances of previous periods and the active companies shall try to find a partner to offset the positions on bilaterally basis. If the companies cannot find offsetting volumes the TSO finally balances the accounts.

Could you please specify if pre-arranged contracts to offset the volumes are regarded as balancing contracts or as bilateral contracts which needs to be reported under REMIT?

In case they have to be reported, we would like to make ACER aware that the transaction timestamp is after the delivery start date which seems to be conflicting according to remarks in the letter to improve the data quality.

To our understanding only contracts with the TSO are defined as balancing contracts and the contracts needs to be reported as Table 2 contracts with monthly executions of the exchanged volumes to avoid balancing.


Answer:

Please refer to Question 3.1.50. In the Agency’s view, a balancing trade is a contract between a party and a System Operator (SO), in most cases TSO, who is in charge of keeping the energy in the network/system (either gas or electricity) in balance.

It is the Agency’s understanding that in “…day after markets”, and any other retro-deal market, market participants balance/adjust their positions with other market participants. If this is the case, these contracts should be reported by both parties as wholesale energy products.

In the Agency’s view, balancing trades are well defined in Articles (2)9 to (2)11 of COMMISSION IMPLEMENTING REGULATION (EU) No 1348/2014, in the sense that they are related to balancing energy and services:

(9) ‘balancing energy’ means energy used by TSOs to perform balancing;

(10) ‘balancing capacity (reserves)’ means the contracted reserve capacity;

(11) ‘balancing services’ means

  • for electricity: either or both balancing capacity and balancing energy;
  • for natural gas: a service provided to a TSO via a contract for gas required to meet short term fluctuations in gas demand or supply.

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FAQs on transaction reporting – Question II.1.1.30

Company deconsolidation from the group perimeter

The companies “XXX” and “YYY” are part of the same group and both registered MPs subject to REMIT. The companies “XXX” and “YYY” entered into transactions but accordingly to Article 4(1) of Commission Implementing Regulation (EU) No 1348/2014 they did not send on a regular basis any reporting related to the contracts.

On 1 July the company “XXX” is going to be deconsolidated from the consolidated financial statement of the company “YYY”. From a reporting point of view, should the contracts in place be reported to ACER? With which timetable? What is the contract date that should be used?

With reference to the reporting of the outstanding contracts, our interpretation is that they should not be reported because agreed out of normal market rules in an infra group context.

In case the Agency believes that those contracts have to be reported, our interpretation is that

  • the reporting should be done in T+1 month from the date of deconsolidation of company “XXX”
  • the contract date should be the same of T.

Answer:

As on 1 July the company “XXX” is going to be deconsolidated from the consolidated financial statement of the company “YYY” and it changes status, in the Agency’s view it is reasonable that company XXX should report all its contracts on T+1 month from its status change with the date of its status change.

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FAQs on transaction reporting – Question II.1.1.31

As on 1 July the company “XXX” is going to be deconsolidated from the consolidated financial statement of the company “YYY” and it changes status, in the Agency’s view it is reasonable that company XXX should report all its contracts on T+1 month from its status change with the date of its status change.

1         Case1: TSO inserts buy offer for block contract 15:00 – 18:00 at 14:30 (in Balancing phase) with BAL parameter. Other market participant inserts sell offer for the same contract at 14:31 with price and volume which fully match the offer inserted by TSO. The trade match time is 14:40 (in balancing phase).

Which data should be reported in this case to ACER?

2         Case2: TSO inserts buy offer for block contract 15:00 – 18:00 at 14:30 (in Balancing phase) with BAL parameter. Other market participant inserts sell hourly offers 15-16, 16-17 and 17-18 (the same time period as block contract inserted by TSO) at 14:31 with price and volume which fully match the block offer inserted by TSO (cross trade enabled – matching of block contracts with hourly and quarterly contracts). The trade match time is 14:40.

Which data should be reported in this case to ACER?

3         Case3: TSO inserts buy offer for block contract 15:15 – 15:45 at 15:05 (in balancing phase) with BAL parameter. Other market participant inserts sell offer for the same contract at 15:06 with price and volume which fully match the offer inserted by TSO. The trade match time is 15:06 (in balancing phase).

Which data should be reported in this case to ACER?

1.  As is written in the TRUM, we are obliged to report offers and trades inserted/concluded outside the balancing phase. In this case, the block contract starts in the regular Intraday trading and ends in the Balancing phase.

Because we cannot divide the block contract into part of Intraday and part of Balancing phase we are planning to report both block offers and trades as is inserted/matched in the trading platform.

2.  In this case one block contract is matched with 3 hourly contracts and last hour of the block contract is in Balancing phase.

With the same reason as it mentioned on topic 1, we are planning to report all offers (block contract and 3 hourly contracts) and also all trades.

3.  Since offer and trade were submitted/concluded in a balancing phase it is our understanding that these market data will not be reported to ACER.


Answer:

We consider the interpretation provided above reasonable. Whenever a contract for balancing purposes cannot be separated from a contract for the supply, that contract should be reported as contract for the supply.

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FAQs on transaction reporting – Question II.1.1.32

We are having some issues with the submission of back loading transaction as they are rejected by a validation rule.  Could the Agency clarify further if back loading transactions can still be reported to the ARIS system?


Answer:

Commission Implementing Regulation (EU) No 1348/2014 clearly establishes that details of wholesale energy products in relation to the supply of electricity and gas executed at organised market places, including matched and unmatched orders, entered into application as of 7 October 2015 and for any other transactions as of 7 April 2016.

The Commission Implementing Regulation also establishes that details of wholesale energy contracts which were concluded before the date on which the reporting obligation becomes applicable and remain outstanding on that date shall be reported to the Agency within 90 days after the reporting obligation becomes applicable for those contracts. Please see also paragraph 3.4 “Start of reporting and reporting frequency” in the TRUM available in the REMIT portal.

This means that back-loading of transactions concluded at organised market places was due by no later than 90 days after 7 October 2015 and 90 days after 7 April 2016 for any other transactions.

The Agency’s system was set to allow back loading of historical data skipping several validation rules. This was done through the submission of an XML file with a date in the filename prior (<) to the date of 5 Oct 2015 00:00:00Z. In this case most of the validation rules were ignored.

This was done to allow market participants to report their back-loading transactions even in those cases where they did not have the full set of information as required by Commission Implementing Regulation (EU) No 1348/2014 for reportable records of transactions, including orders to trade, entered into as 7 October 2015 and 7 April 2016.

However, the Agency had left open the back-loading channel for more than one year in addition to the deadlines set by the Commission Implementing Regulation: 90 days after 7 October 2015 and 90 days after 7 April 2016.

The Agency would like to take this opportunity to reiterate that any transaction executed at an organised market place has to be reported on T+1 day basis and any other transaction on a T+1 month basis and that any transaction reported 90 days after 7 October 2015 and 90 days after 7 April 2016 cannot and will not be considered back-loading, but rather late reporting.

In cases of late reporting, market participants and organised market places should liaise with their RRM as these regularly receive instructions on this topic from the Agency.

The Agency would like to remind that late reporting may constitute a breach of Article 8(1) of REMIT.

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FAQs on transaction reporting – Question II.1.1.24

Related documents: TRUM 3.2.5 (Page 17); TRUM Annex 2: Example 7.01 and 7.02; FAQ 4th Edition March 2016 (Q1.1.11; Q3.1.11; Q3.1.13).

Can you please clarify the reporting route for the following scenario relating to bilateral gas transactions in the UK:

Party A and Party B enter into a framework agreement for executing bilateral gas swaps between UK entry (beach) and exit (NBP) points.  The purpose of the agreement is to agree on how to share the financial savings (benefit) received by Party A paying only the short haul gas tariff rather than Party B paying gas entry commodity charges and Party A paying exit commodity charges.  The framework states that the mechanism for achieving this benefit will be by executing individual back to back bilateral transactions under the general master agreements for beach and NBP transactions respectively each time the traders agree to transact.

The framework agreement doesn’t set a price or volume and doesn’t place any obligations on either party to enter into any transactions.  Whenever the traders agree to trade under the framework agreement, Trader A and Trader B will agree the period, price and volume for each transaction at the time of entering into the individual back to back transactions with the final prices agreed on any day for the beach and NBP transactions being inclusive of the share of any benefits from the short haul tariff savings as set out in the framework agreement.

Example: In practical terms, each time the traders agree to transact under the framework agreement, Party A will agree a price with Party B to buy a set volume of gas over a set period (day) at the beach under a general master agreement and at the same time agree the price to sell the same volume of gas over the same period (day) to party B at the NBP under a separate master agreement.  Both transactions will be executed as bilateral transactions (outside of an OMP) but are the same as contracts admitted to an OMP and therefore classified as standard contracts in accordance with TRUM section 3.2.5.

Our interpretation is that as the framework agreement setting out the mechanism for agreeing the gas swap is a general agreement that doesn’t define a volume or price, it will not be reportable under REMIT.  However, each time the traders agree to enter into back to back transactions in relation to the framework agreement, both transactions should be reported as separate standard contracts carried out under their respective master agreement and reported using Table 1 on Day +1.  This is our preferred approach and we are seeking ACER’s views on this approach.

However, we can also see similarities to the example 7.01 and 7.02 in the TRUM where the framework would be reported as table 2 (D+30) and the individual executions rolled up and reported monthly as table 1s (D+30).


Answer:

As the price and quantity are set prior to the delivery, the back to back transactions shall be reported via Table 1. The framework contract is not reportable.

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FAQs on transaction reporting – Question II.1.1.25

Please give us your clarification on the following issue.

Notwithstanding the below ACER’s explanation published in updated FAQ:

QUESTION 1.1.12

Reference to Article 3 (1) of Commission Implementing Regulation (EU) No 1348/2014. As for the framework agreements such as EFET General Agreement Concerning the Delivery and Acceptance of Electricity, could you please explain if they also should be reported even if an Individual Contract (in the meaning of the EFET General Agreement) wasn’t concluded? Example: The Parties concluded the EFET General Agreement but they didn’t conclude any Individual Contract (in the meaning of the EFET General Agreement). First Individual Contract was concluded three months after conclusion of the EFET General Agreement.

Our understanding is that such master agreement only sets out the rules for trading activities of the two counterparties of a contract, but does not set any obligation to the two parties. In our opinion, the conclusion of such a general agreement of the Delivery and Acceptance of Electricity, i.e. the agreement sets out the general terms for trading, but does not specify the price setting of volume optionality, e.g. the amount of electricity, time and place of delivery and price, is not a reportable contract. Furthermore, only the Individual contracts concluded under the terms of a General Agreement Concerning the Delivery and Acceptance of Electricity shall be reported to the Agency.

Could you please inform us if there is a need to report (backload) the EFET General Agreement in which counterparties agree on maximum yearly gas volume that can be delivered under this contract (not an obligation to any of the parties). Does the following wording make the framework contract non-standard, that have to be reported according to the REMIT:

Ҥ 4 Primary Obligations For Delivery and Acceptance of and Payment For Natural Gas

At the end of §4.1(a) insert: “The amount of Contract Quantities for relevant Total Supply Periods agreed under all Individual Contracts entered hereunder shall not exceed ______ (________) MWh per year.”

According to Ukrainian legislation, the approximate maximum gas volume is a fundamental condition of the contract, due to the Clause 1 of the Regulation on the form of the international agreements (contracts), N201 dd 06.09.2001: “The conditions that need to be defined in the international agreement (contract), if the Parties of such agreement (contract) do not agree on the different defining of the contract conditions and such arrangement does not release the contract of subject, object, purpose and other fundamental conditions, without confirming of which between the parties such contract can be considered as non-executed, or invalid due to the disregard of the provision on the contract form applying under the  applicable Ukrainian law, are the follows:….4. The quantity and quality of goods”

Also for your information, such approximate maximum volume in all already executed EFET General Agreements is variable and is agreed based on the ability of the counterparty to supply. In addition, I would like to emphasize on the fact that this indication of the volume in the Election Sheet is not an obligation to the Seller to deliver and to the Buyer to off-take. This is just an approximate maximum limit, which was approved by Ministry of Economic Development and Trade.

We have several EFET GA executed before the April, 7th, which are all outstanding and in which the approximate maximum gas volume was specified. Thus, we would highly appreciate if you could give us your official opinion on this issue as soon as possible, so we would be ready to backload them in case of need till the July, 6th.


Answer:

In the light of Question 1.1.11 we do not consider EFET General Agreement with defined maximum amount of delivery of gas per year reportable. The inclusion of the maximum volume in the contract is specific to the national law and does not make the EFET General Agreement a non-standard contract.

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FAQs on transaction reporting – Question II.1.1.26

Related documents: FAQ: Question: 1.1.17

Can you please clarify if the EMIR approach to Novations will be applied.

Scenario 1: Trade being fully novated

Will we be required to send a cancel/ exit for the trade (old UTI) against pre novation party and a ‘new’ submission for the trade (New UTI) against the new party? i.e. same UTI cannot be used post novation

Scenario 2: Trade to be split by Novation

Will we be required to send a modify (old UTI) for the trade remaining with the original party and a ‘new’ for the trade (New UTI) with new party?

In order to report a novation, an early termination with the old UTI and a new trade with a new UTI should be reported. Both market participants, MP1 and MP2 have to submit an early termination report with Action Type “C” for Cancel the old trade and e.g. MP1 and MP3 a new submission with Action Type “N” for the new trade between MP1 and MP3 with a new UTI.

Novation of trades: MP 1 will rename itself and become MP 3 with all codes (ACER, LEI etc) from MP 1. Do we need to modify any trades or do we just need to change the data in CEREMP?

MP 2 will merge with MP 3 to one legal entity MP 3 which comprises the assets of former MP 2 and MP 3: do we need to early terminate trades for MP 2 and submit new trade reports for MP 3? Can we resubmit the complete trades under the merged company (MP 3) or do we actually need to split trades in delivered and undelivered segments? Are any differences between table 1 and table 2 to be taken into account?

Example: MP 2 has a deal with MP X (external party) for cal 2016. A merger between MP 2 and MP 3 takes place on August 1. Are the deals already reported and settled to be early terminated and submitted as new under MP 3? Does MP X to do the same? Has MP X to be informed/asked to do the same?

Since we had already submitted a question to ACER previously and received no feedback as to now we would ask you to reply by June 3 in order for us to do necessary preparations.

If we do not receive a response from ACER we will proceed with our best effort: we will send early terminations for open trades for MP 2 and submit new reports for MP 3 without splitting the trades.


Answer:

All the open trades have to be novated with the name of the new legal entity to notify the change of the counterparty to the contract. In order to report a novation, an early termination with the old UTI and a new trade with a new UTI should be reported.

Both market participants, MP2 and MPX have to submit an early termination report with Action Type “C” for Cancel the old trade and MPX and MP3 have to provide a new submission with Action Type “N” for the new trade between MPX and MP3 with a new UTI.

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FAQs on transaction reporting – Question II.1.1.27

We started to report form April the 7th, 2016 and we reported all our standing contracts in backload and added, as it happened, execution of them. All the transactions were accepted.

Now one of our supplier, a company, from outside the EU, asked us to report for it as well. And here is where we have a problem. When we reported our contracts (3) in backload with this supplier he didn’t have an ACER code then and we reported that contract, and later execution, using the ACERNONMP.EU code. Now our supplier informs us that he has his ACER code now and asks us to report for him as well. All contracts were reported and accepted as well as all execution.

We have reported again those contracts and transactions with correct ACER code, and we would like to delete the ones with the ACERNONMP.EU code. My question is how we should do that: report it as error or report denouement?


Answer:

As specified in the FAQ 2.6.2 a modification report with the updated ACER code should have been reported. It is necessary to modify the original report with the updated ACER code.

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