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FAQs on transaction reporting – Question II.2.5.1

Back-loaded trades.  What indicator/field should we use for back loaded trades for historic contracts executed on Exchange?
We require an indicator because the validation for the back-loaded trades may be more relaxed than for the regular trades as the MP may not be able to supply all the details currently required by ACER.  The TRUM shows the use of “BACKLOADING” in the Contract Name field for off-market trades, but what about Exchange Traded trades?

Do we use the text “BACKLOADING” in the Contract Name field for Exchange-Traded trades or will there be a new action to indicate Back loading?  If not, can we agree with other RRMs to use the Linked Order ID field with the text “BACKLOADING” to indicate a back-loaded trade?


Answer:

The validation rules for the back loaded trades will be more relaxed than for the other trades as the market participants may not be able to supply all the details required for standard contracts. The TRUM shows the use of “BACKLOADING” in the Contract Name field for off-market trades as an example.

The TRUM also indicates that any information from examples of trades executed on continuous markets or auction markets can be applied to bilateral contracts and vice versa (for example profiles used in one trading example can be used to report a different trading example). The same logic applies to exchange traded contracts.

Please see example (2.19) “BACKLOADING” trade in Annex II to the TRUM.

RSS_Icon Last update: 08/09/2015  

FAQs on transaction reporting – Question II.2.5.2

XXX Futures EU and XXX Spot seek further clarification from ACER in relation to the back loading requirements for Exchange Traded Derivatives.

On page 19 of the TRUM, ACER states that: “In order for the agency and the NRAs to know each market participant’s open positions at the time the reporting obligation becomes applicable, market participants shall report contracts which were concluded before the date on which the reporting obligation becomes applicable and remain outstanding in that date.”

Please could ACER clarify if and how the back loading requirement covers Exchange Traded Derivatives (“ETDs”)? Whilst the TRUM states that organised market places’ willingness to assist market participants with the back loading reporting is entirely at the discretion of the OMP, there is a potential reporting burden placed on Market Participants for which they may need the assistance of the OMP.

Example: When an ETD such as a futures contract is traded top day, the contract is concluded that day leaving an “End of Day” position at the exchange level. The positions in these ETD contracts do not remain outstanding and the positions are not technically “open” in that the transaction has been concluded. The futures position can however be subsequently traded out if the position holder decides; this would result in new trades.  Effectively, unless the position has not been assigned correctly, prior to the 07 October 2015, then there are technically no trades that have yet to be concluded to report.

The back loading requirement does not cover ETDs   (futures and options) given that they are no contracts which were concluded before the date on which the reporting obligation becomes applicable (07 October 2015) and remain outstanding on that date.


Answer:

In our view, outstanding contracts are those contracts that have an outstanding physical or financial flow as defined by the contract and not by the settlement of the invoice date. For futures we would expect to see the positions that are technically still “open” and that can be still trade out (or closed) or to be settled. Please see also “Additional clarification on the back loading requirement” available in the TRUM.

RSS_Icon Last update: 08/09/2015  

FAQs on transaction reporting – Question II.2.5.3

With respect to the reporting of transactions on wholesale energy contracts that were concluded prior to the date on which the reporting obligation becomes applicable and remains outstanding on that date (back-loading), it is unclear whether this includes or excludes trades that have expired on that date, but remain unsettled.
Please confirm whether wholesale energy transactions to be back-loaded include trades that haven’t settled, although expired on or before the date on which the reporting obligation becomes applicable.

Trade expires on 07/10/2015, but settles a day or two later – In scope for back-loading?

  • Trades expires prior to 07/10/2015, but settles on 07/10/2015 – Out of scope for back-loading
  • Trade expires and settles prior to 07/10/2015 – Out of scope for back-loading
  • Anything that hasn’t settled on the date the reporting obligation becomes applicable has not “concluded” and therefore is in-scope for back-loading of data to the ACER?

Answer:

The Agency considers outstanding contracts those contracts that have an outstanding physical or financial flow as defined by the contract and not by the settlement of the invoice date. For futures the Agency would expect to see the positions that are technically still “open” and that can be still traded out (or closed) or settled. Please see also “Additional clarification on the back loading requirement” available in the TRUM.

With regard to the above question:

  • Trade expires on 07/10/2015, but settles a day or two later is in scope for back loading
  • Trade expires prior to 07/10/2015, but settles on 07/10/2015, is in scope for back loading
  • Trade expires and settles prior to 07/10/2015, is out of scope for back loading

RSS_Icon Last update: 16/11/2015  

FAQs on transaction reporting – Question II.2.5.4

Articles 40(1), 40(2) and 44(2) make clear the backloading requirements that Market Participants should consider the minimum requirement for the reporting of contracts which were concluded before the date on which the reporting obligation becomes applicable and remain outstanding on that date i.e. 7th April 2016.

Where other information which is required to be reported under REMIT can be extracted from market participants’ existing records, market participants shall also report that information.

But could ACER please provide some clarity as to whether trades would need to be backload reported if trades have a delivery and settlement date prior to the 7th April 2016 but where there may be some scenarios whereby there will be some cash flows/payments that will not be able to be made until after this date but will not impact the trade or the delivery.

An example of this may be the result of the way that a trade is priced e.g. the trade is agreed and concluded pre- 7th April 2016 but priced as an average over all of April 2016 hence the price will not be known until it is calculated after 7th April 2016.

On the basis that all aspects of the trade will be concluded/ settled/delivered prior to the 7th April 2016, XXXX would like to confirm ACERs view that these would be out of scope for the backloading requirement based on:

–   the agreement and conclusion of the trade and/or any delivery will have taken place prior to the 7th April 2016 and that the outstanding cash flow is not material in the context of REMIT transparency or in relation to market manipulation;

–   in the spirit of what REMIT is trying to achieve, reporting these trades to ACER would add little apparent value in terms of transparency, market manipulation or market impact and that

–   the TRUM seems to hint (although not explicit) that the delivery of the contracts is the key factor for reporting requirement generally (3.2.1 point (iv)).


Answer:

Since the contract and all its aspects have been concluded/ settled/delivered prior to 7 April 2016 the obligation to report backloaded contracts does not apply for the above-mentioned scenario.

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