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FAQs on transaction reporting – Question II.2.3.1

For Cash Settled products, do we need to provide all the delivery details?  For example, Delivery Start date, Delivery end dates and Delivery Profile are currently mandatory fields.

Are there default values that we should use to indicate they are Cash Settled or will the field be made optional in the next version of the Table1 Schema?

Suggested solution: e.g. we could use “00:00Z to 24:00Z” in the Delivery Start/End dates.


Answer:

For Cash Settled products the delivery details should be provided as for physical products. Delivery Start date, Delivery End date and Delivery Profile are mandatory fields. Any derivative related to EU gas or electricity (or their transportation) has a reference price or index. This reference price (or index) is related to the commodity which is delivered somewhere in the EU on a specific date and time.

Please note that for delivery periods “00:00Z to 24:00Z” format is not valid. Delivery profiles are reported in local time e.g. 00:00 to 24:00.

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FAQs on transaction reporting – Question II.2.3.2

Futures trades on exchanges can cascade. Are cascades reportable?

Example: Participant executes a futures trade on an exchange. Trade goes into delivery, resulting in the creation of one or more physical trades by the exchange.

Cascaded trades are not reportable because the original futures trade will have been reported by the participant.


Answer:

Please see the TRUM and Annex III to the TRUM which already clarify what it is a reportable transaction. Cascade trades are post-trade events and not reportable because the original futures are reported by the participant. Cascade trades are not transactions in the REMIT sense. This is in line with the meaning of entering into transaction according to Article 5 of MiFID I where the meaning of entering into transaction does not include actions related to option exercise, settlement or clearing.

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FAQs on transaction reporting – Question II.2.3.3

We would like to know whether the orders introduced in retail CFD trading platforms for the trading of electricity or gas CFDs, are covered by the REMIT reporting obligation.

For example, currently there are CFDs on gas and electricity trades that are being reported to comply with EMIR reporting obligations. Since these trades are done in “retail” platforms, we are wondering if the orders associated to them are reportable under REMIT. The doubt arises because these platforms are commonly known as retail platforms and REMIT normally applies to wholesale trading.


Answer:

The Agency understands that Contracts For Difference (CFD) are derivatives (similar to futures). Guidance on reporting derivatives can be found in the TRUM and in Annex III of the TRUM available on the REMIT portal. The Agency believes that the question raised is already sufficiently addressed in Annex III of the TRUM.

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FAQs on transaction reporting – Question II.2.3.4

If ‘alpha’ trades identified by the UTI generated by the OMP are reportable under REMIT (if not reported under EMIR) then do the lifecycle events of the ‘gamma’ trade qualify as eligible for reporting, if so how is the UTI of the ‘gamma’ trade linked and is the Clearing Broker expected to report their side?


Answer:

The Agency has already provided its understanding in Annex III to the TRUM (available on the REMIT portal), according to which clearing brokers do not have reporting obligations under REMIT for their clearing activity. The UTI of the transaction executed at the exchange may be different than the UTI of the back to back transaction reported by the executing broker (or other member of the exchange) and their clients. Still, both transactions should indicate the Organised Market Place they were originating from.

Executing Brokers can report their transactions in two ways:

  • reporting two trade reports: one trade executed on the exchange and one trade as a back-to-back transaction 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.2.3.5

Art. 6(1) REMIT implementing regulation

Since X Exchange doesn’t have an order book, X Exchange doesn’t receive any orders and therefore X Exchange doesn’t have the obligation to send their orders to ACER, nor it needs to offer the service to its members to report the orders (which as commented are inexistent) to ACER. Please confirm.


Answer:

If X Exchange does not have an order book and does not receive any orders, then X Exchange does not have the obligation to offer to their clients the reporting service for their orders to the Agency.

If there are no orders to be reported, X Exchange may offer the reporting service to their clients for trades reportable under REMIT.

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FAQs on transaction reporting – Question II.2.3.6

In some cases where trades are executed via a broker, these trades are in the broker’s books for some time until the position is allocated to the respective customers.

Are these brokers considered to be market participants? If so, (how) would this interfere with them being OMPs?

By consequence: do these trades with brokers as counterparties need to be reported under REMIT? Or are only the allocations (give-up/take-up) to be reported?


Answer:

Our understanding is that firms may have several business activities. When a firm is an executing broker (exchange member) and is also an Organised Market Place (it runs a Broker platform) the firm has two different types of business and it should be treated as such. For their executing broker business the firm may need to register with the competent NRA as market participant. Further details can be found in Annex III to the TRUM available on the REMIT Portal.

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.2.3.7

For Exchange Traded Commodity Derivatives only, executed by an Executing broker and cleared at a Clearing Broker. From the Executing Brokers point of view only:

  1. Can ACER confirm that if an underlying client is not a REMIT market participant, then we as the executing broker have no obligation to populate them as the beneficiary in field 8?
  2. Can ACER confirm that if an underlying client has registered as a REMIT market participant, however only executes cash settled derivatives, with no ability to make or take delivery and is not an exchange member, they would not be considered market participants for the purpose of reporting these trades only and therefore we as the executing broker have no obligation to populate them as the beneficiary in field 8?
  3. Can ACER confirm that if an executing broker knows they are giving up an executed transaction to an EMIR regulated clearing broker, or for a client who is required to report under EMIR, they can place reliance on the fact that the beneficiary will be reported under EMIR? Order details will still be reported as standard by us via the OMP.

Answer:

With regard to point (1) field (8) Beneficiary ID indicates the ID of the beneficiary of the transaction in the case that the trade is executed by a third party on behalf of a market participant. If an executing broker’s underlying client is not a REMIT market participant, then the executing broker may not populate the beneficiary in field (8).

With regard to point (2), if an executing broker underlying client has registered as a REMIT market participant (meaning that that person enters into transactions, including the placing of orders to trade, in one or more wholesale energy markets) even if only executes cash settled derivatives, with no ability to make or take delivery and is not an exchange member, that person would be considered market participant for the purpose of reporting all their trades and orders and therefore the executing broker may populate that market participant as the beneficiary in field (8).

If a person is a market participant that person has to report all their transactions in wholesale energy markets irrespective of where they take place. If field (8) is not populated, a back to back transaction between the executing broker and their underlying client should be reported, unless that transaction was already reported under EMIR.

With regard to point (3) above, according to the ANNEX III of the TRUM, under REMIT the executing broker (e.g. firm ABC) has to submit the order details only. This reporting must be done by delegation to the Organised Market Place or third party service provider. Firm ABC does not have to submit any trade report if the trade was reported under EMIR. Contract details reported by the clearing broker (Firm XYZ) and by the executing broker’s client (Client 123), under EMIR and, according to the Agency’s understanding, should make reference to the executing broker.

RSS_Icon Last update: 14/12/2016  

FAQs on transaction reporting – Question II.2.3.8

For Exchange Traded Commodity Derivatives only, executed by an executing broker and cleared at a clearing broker. From the end client’s point of view only:

  1. Can ACER confirm that if an underlying client is not a REMIT market participant, then they themselves have no reporting obligation?
  2. Can ACER confirm that if an underlying client has registered as a REMIT market participant, however only executes cash settled derivatives, with no ability to make or take delivery and is not a direct exchange member, they would not be considered market participants for the purpose of reporting these trades only and themselves would not have a reporting obligation?
  3. Can ACER confirm that if a client is a REMIT market participant, which has a reporting obligation, but does not clear through an EMIR regulated clearing broker, or have any reporting obligations under EMIR, they can place reliance on the fact that the beneficiary will be reported by the Executing broker on their transaction report via the OMP?

Answer:

With regard to point (1) if the executing broker’s client is not a market participant there is no obligation to report REMIT transactions. The obligation to report REMIT transaction is on REMIT market participants. Please see Q&As on REMIT document, Questions II.4.2, II.4.43, and II.4.47

With regards to point (2) the question may apply to two different scenarios:

(a) if an underlying client has registered as a REMIT market participant, it means that they enter into transactions, including the placing of orders to trade, in one or more wholesale energy markets.

If the client executes cash settled derivatives, with no ability to make or take delivery and is not a direct exchange member, the client has to report all their transactions including cash settled derivatives because the client is a market participant in a first place.

(b) if an underlying client has registered as a REMIT market participant, but does NOT enter into transactions, including the placing of orders to trade, in one or more wholesale energy markets, that client should not have registered as REMIT market participant and therefore, as indicated in the TRUM ANNEX II: “a client of an exchange member that places orders to trade on the order book of the venue to trade EU gas or electricity derivatives for financial settlement or it is equivalent (e.g. trading on futures for the physical delivery without having arrangements to take or make the delivery of the commodity) should not be considered a market participant unless the client of the exchange member is itself a member of the exchange for the purpose of this trade.”

With regard to point (3) if a client is a REMIT market participant, which has a reporting obligation, but does not clear through an EMIR regulated clearing broker, or have any reporting obligations under EMIR, as indicated in the TRUM Annex III “market participants should report transactions under REMIT only if those transactions are not reported under EMIR …….”  they may place reliance on the executing broker reporting the client’s ID as beneficiary in filed (8) on executing broker’s transaction report reported by the OMP (or third party RRM), or alternatively report a back to back transaction between the client and the executing broker.

It is worth noting that there may be some ETDs traded on EU venues by non-EU counterparties that are not reported under EMIR (e.g. U.S. counterparties reporting under the Dodd Frank Act). The Agency understands that these trades have to be reported under REMIT and, if not reported under EMIR, have to be reported through the Organised Market Places or third party RRM reporting on their behalf.

RSS_Icon Last update: 14/12/2016  

FAQs on transaction reporting – Question II.2.3.9

For Exchange Traded Commodity Derivatives only, executed via Direct Market Access (DMA) and cleared at a Clearing broker.

From the End Client’s point of view only, can ACER confirm that if an underlying client is not a REMIT market participant, then they themselves have no reporting obligation?

Is the DMA provider a REMIT Market participant?

How DMAs’ clients that are market participant should report their trades without reporting a back to back transaction?


Answer:

If an underlying client is not a REMIT market participant, then they themselves have no reporting obligation.

When a Clearing Broker (e.g. DMACB) offers Direct Market Access (DMA) on an exchange to its client, although it is the DMACB’s client who trades, the trade is done via the DMACB‘s membership. Therefore, it is the Agency’s understanding that the DMA provider (DMACB) should be considered a REMIT market participant within the REMIT framework as it places the order on the exchange for its client.

In the Agency’s view, a person that place an order in the exchange is a market participant even if it will not be a counterparty to the trade. Market participants that place orders on the screen of the exchange have to be identified in the trade report as responsible for the reporting of the report. This does not imply that they are counterparty to the contract, but that they are responsible for the reporting of the order or the trade. Please also see FAQs document on transaction reporting Q. II.2.1

As indicated in the TRUM Annex III “market participants should report transactions under REMIT only if those transactions are not reported under EMIR …….

As a REMIT market participant, DMACB is required to report orders and transactions (if DMACB is counterparty to the trade and not reported under EMIR) in wholesale energy derivative contracts to the Agency. It is possible that DMACB’s clients are also market participants under REMIT. This can be the case when clients have own memberships on other REMIT energy exchanges, or when they trade bilaterally any REMIT physical products.

When the exchange reports trades (not orders) on behalf of DMACB, the exchange may report the ID of the DMACB’s client as end beneficiary in field (8) Beneficiary ID. Please note that for orders there is no need to report the Beneficiary ID.

In addition, the Agency understands that DMACB ‘s clients may trade on the exchange under (1) Locally Managed Accounts (LMA) or (2) System Managed Accounts (SMA).

  1. In case of the LMA set-up, the exchange does not see the information concerning the end-user (DMACB’s client) and would report DMACB as a market participant, which means that the end beneficiary field would not be filled in. DMACB and the exchange may agree to report the DMACB’s client ID in the beneficiary field (8) if this is a market participants but only for trades not reported under EMIR and not for orders.
  2. In case of the SMA set-up, even if the exchange is able to see the identity of DMACB’s client (via an ACER code), the exchange should NOT report the ID of the DMACB’s client as market participant but as beneficiary in Field (8) Beneficiary ID if the exchange receives that assignment by the DMACB if the trade has not been reported under EMIR.

The Agency’s view is that the correct reporting should not depend on the two different set-ups (i.e. LMA or SMA), but on the definition of market participant of REMIT. Therefore when an order is placed on the DMACB’s membership the exchange should not report the ID of the DMACB’s client as a Market Participant in field (1).

Therefore when a trade is executed on the DMACB’s membership the exchange should not report the ID of the DMACB’s client as a Market Participant in field (1) but the ID of DMACB and the DMACB’s client ID in Field (8) Beneficiary ID if agreed with the DMACB and if the trade was not reported under EMIR.

Please note that for orders there is no need to report the Beneficiary ID as this applies to transaction only if not reported under EMIR.

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FAQs on transaction reporting – Question II.2.3.10

Basis Swaps – defining who the buyer and seller are so counterparty fields can be correctly and consistently populated.

We trade products that are basis swaps. These are swaps where each leg is floating. Whereas for fixed-floating swaps we can use market convention to define the buyer, for floating-floating swaps there is no clear guidance on which leg the buyer is and which leg the seller is. For some jurisdictions we can report trades as generic so we don’t have to define buyer / seller for reporting purposes. Does ACER have any guidance?

We have our own convention in our internal systems for defining buyer / seller that we apply consistently.


Answer:

In the TRUM, under Field (25) for Table 1 “Fixing index or reference price” there is clear guidance on which leg the buyer is and which leg the seller is.

For derivatives that have not already been reported under EMIR, and which are therefore reported under REMIT, the following buyer and seller logic should apply: for example, in the case of a fix to floating derivative, if party X buys a swap, then party X pays a fixed price and party Y pays a floating price. This means that party X receives the floating leg and party Y receives the fixed leg. X will be identified as a buyer (B) and Y will be identified as a seller (S).

In the case of a floating to floating derivative, if party X buys a swap, party X pays the floating price of the first leg (or index) and party Y pays the floating price of the second leg (or second index). In this case, legs (indexes) should be sorted alphabetically. X will be identified as a buyer (B) and Y will be identified as a seller (S).

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