Please insert at least 3 characters

FAQs on transaction reporting – Question II.3.6.1

About outstanding contracts, a financially settled Derivate transaction ending the month of March 2016, for example a Fix-for-Floating API2 Swap, has an outstanding financial flow due to be invoiced on the 5th working day of April (7 October 2015 – Reporting Start Date). However, as the financial settlement amount is fixed on the final pricing day in September it does not count as an outstanding contract to be back-loaded under REMIT.

Yet the same contract for a different Commodity would indeed have an outstanding financial flow, as there is a time lag in the publishing of the fixing prices meaning the settlement fixing price for March 2016 would not be published until the end of April 2016, and would therefore fall under the back-loading rule.

Regardless of the fact that we would be reporting these derivative contracts under EMIR and will not be double reporting under REMIT are these assumptions correct in ACERs view?

About outstanding contracts, we have an EFET General Agreement Gas with a Counterparty and have concluded an individual contract under the General Agreement with that counterparty for the delivery of Natural Gas in Gas Year 2014/2015 via an Energy Broker OMP (physical delivery from 01.10.2014 06:00 to 01.10.2015 06:00).

The payment terms are contractually agreed in the General Agreement according to § 13.1 Invoice and § 13.2 Payment (20th of the month following delivery), and are also confirmed on the individual contracts.

Therefore, the wholesale energy contract does not have an outstanding physical flow. However, the “financial flow” (Settlement) is contractually agreed and due on 20 October 2015 and hence outstanding.

Nonetheless, as I understand your answer in the FAQs, this would not count as an outstanding financial flow but merely as the settlement of the invoice date (despite the fact that it has been contractually agreed in advance) and is not relevant for REMIT Backloading.

The same rule should apply for Spot delivery contracts with a physical delivery ending 07.10.2015 00:00. Also correct?


Answer:

In the above question, a Fix-for-Floating API2 Swap seems to mean a swap on coal, which falls outside the scope of REMIT.

However, any contract related to the supply of gas or electricity, irrespective if it is a physical forward, a future or an option, has a reference to a delivery period. Also financial derivatives related to EU gas or electricity have a reference price which relates to a delivery period of the commodity.

For physical trades, the gas or electricity delivery period of the commodity is the one that should be observed. Any contract that considers a delivery of EU gas or electricity after 7 October 2015 (Phase 1) or 7 April 2016 (Phase 2) should be considered an outstanding contract and would fall under the back loading rules.

For example a physical forward that delivers electricity from 1 April to 30 Aril 2016 would be considered an outstanding contract on 7 April 2016. The same applies to any contract for the delivery of the energy commodity after 7 April 2016 irrespective of the financial settlement of the invoice. A contract for the delivery from 1 March to 31 March 2016 with a financial settlement of the invoice after 7 April, should not be considered subject to back loading.

The same applies to financial derivatives related to EU gas and electricity. A monthly future on gas or electricity that settles in cash (a financial derivative) does so against a cash flow/a series of cash flows in a particular month. That month, or any other period of time covered by the instrument, is the one that has to be taken into consideration for the calculation of the exchange of cash flows.

On the contrary, the point of time when the payment between the two parties really takes place, e.g. 20 days after the delivery period that the contract refers to, is not taken into consideration for the purpose of considering a contract subject to the back loading rules.

RSS_Icon Last update: 16/02/2016  

FAQs on transaction reporting – Question II.3.6.2

Reference to TRUM V2.0 3.2.7, Back-loading

Do we have to report back-loading for « BILCONTRACT » and also « EXECUTION »?


Answer:

Any outstanding contract has to be reported as back loaded. Execution under the framework of non-standard contracts concluded before the 7 April 2016 do not fall under the scope of back-loading.

Executions under the framework of non-standard contracts should be reported with Table 1 and linked to non-standard contracts that have already been reported to the Agency with Table 2. See examples in Annex II to the TRUM.

Since there is a three-month period time for the back loading of outstanding non-standard contracts, the reporting of transaction executed under the framework of non-standard contracts are reportable if they take place after the reporting of the back loaded report.

RSS_Icon Last update: 16/02/2016  

FAQs on transaction reporting – Question II.3.6.3

Market participants are required to backload their trades. For the backloading, is it enough to report a contract once or should we do monthly executions on this specific contract for the duration of the contract in the past also?

As an example: we report a bilateral contract, which runs from 01.01.2010 until 31.12.2020. For the Backloading, would it be sufficient to report the contract once with the non standard contract Template and do the monthly execution from April 2016 on? Or should we report the monthly executions with the std contract Template for the time in the past (01.01.2010-01.04.2016), which in this example would mean 75 execution reports.


Answer:

Please refer to FAQ. 3.6.2:

Any outstanding contract has to be reported as back loaded. Execution under the framework of non-standard contracts concluded before the 7 April 2016 do not fall under the scope of back-loading.

Executions under the framework of non-standard contracts should be reported with Table 1 and linked to non-standard contracts that have already been reported to the Agency with Table 2. See examples in Annex II to the TRUM.

Since there is a three-month period time for the back loading of outstanding non-standard contracts, the reporting of transaction executed under the framework of non-standard contracts are reportable if they take place after the reporting of the back loaded report.

RSS_Icon Last update: 26/04/2017  

FAQs on transaction reporting – Question II.3.6.4

Related documents: II.3.6 of the Frequently Asked Questions

Question relates to the reporting of executions under back loaded nonstandard contracts.

According to II.3.2 of FAQs, an execution completed before 7 April 2016 does not need to be reported. Executions with delivery period extending beyond 7 April 2016 need to be reported. However, as the deadline for backloading of nonstandard contracts is 7 July 2016, the questions are:

  1. Does an execution with a delivery period ending before the nonstandard contract is back loaded need to be reported?
  2. If yes, what is the deadline for reporting such an execution? Should it be reported within 30 days of the end of the delivery period, even if this is a date earlier than 7 July 2016 (in which case the nonstandard contract should be back loaded not later than the date of reporting of the execution)? Or should such an execution be reported only when the nonstandard contract is back loaded, even if this falls later than 30 days from the end of the delivery period of the execution.

Answer to the second question of II.3.6 of FAQs (which probably should be properly marked as question 3.6.2, instead of 3.6.1) suggests that only executions with delivery periods ending after a nonstandard contract is actually back loaded are reportable. This would mean that executions with delivery period ending after 7 April 2016 but before the nonstandard contract is actually back loaded (which can happen by 7 July 2016) would not be reportable at all. We are not clear if this was the actual intention of the Agency.

As a follow up question: when new executions of a back loaded contract are reported after the backloading is done, do the data reported by each of the counterparties regarding such executions need to match? Many Xxxx market participants are reporting to me that they have significant difficulties in agreeing with some counterparties how the historical contracts are to be reported and it is quite likely that several back loaded contracts will be reported by each of the respective counterparties differently (with non-reconciled data). I would greatly appreciate your input on this. My understanding is that in case of back loaded contracts both data reported by the two counterparties under table 2 and data reported under table 1 for executions of back loaded contracts are not required to match.


Answer:

Executions under the framework of non-standard contracts with a delivery period ending before the nonstandard contract is back loaded do not need to be reported.

Criteria for back loading are more relaxed. Please refer to TRUM Annex II, e.g. Example 4.05 to see the differences in the back loaded contract reported by two counterparties.

RSS_Icon Last update: 10/07/2017  

RSS_Icon Subscribe to this Category’s RSS