FAQs on transaction reporting – Question II.3.2.11 [DELETED]

The question (in previous edition: Question 3.2.10) was deleted due to duplication.

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FAQs on transaction reporting – Question II.3.2.15

Data field (42)

Reference is made to the lifecycle event for Non Standard contracts and in particular to amendment of long-term contracts where there is no delay in the start of the delivery. When a MODIFY for TAB2 is submitted which value for Field 42 (Delivery start date) should be used?

  1. Should the field be populated with the date since which the amendment is effective or;
  2. Should the field always maintain the same value (date) as the one that was reported for the NEW lifecycle event

Reference:

Transaction Reporting User Manual (TRUM)

Practical Example:

In case ACER guidance is for 2) we highlight the risk that, since normally the long term contract’s formula (if contract price is one of the contractual sections affected by the amendment) becomes retroactively effective since the date of effectiveness of the amendment, maintaining in Field 15a also the previous info for such formula (that was valid previously) and the text describing the time switches, could soon saturate the 1000 characters currently allowed. Again, in option 2), could it be acceptable that Field 15a only reports the price formula valid due to the last amendment originating the MODIFY (with an explicit info stating the first day in which such formula is valid) and that also information in Fixing Indexes and Volume Optionality be reported with sole reference to the last amendment originating the MODIFY event?


Answer:

In the Agency’s view, when an amendment of a long-term contract has to be reported, the modified record should be submitted with the Action type “M” (‘Modify’) and should include the same delivery start date in Field 42 and the new price formula in Field 15. The ‘explicit info stating the first day on which such formula is valid’ can also be reported in Field 15.

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FAQs on transaction reporting – Question II.3.3.2

Reference to:

  • Article 3(1) of the Implementing Acts. List or reportable contracts: Options, futures, swaps and any other derivatives of contracts relating to electricity or natural gas produced, traded or delivered in the Union.
  • Option Details from ANNEX “Details of Reportable Contracts” in the Implementing Acts: Tables 1 and Table 2
  • TRUM, Table 1 #44: Option Exercise Date

“A European style option can only be exercised at the maturity date.”

  • TRUM, Table 1 #46: Option Exercise Date:

“This field identifies the date at which the option holder has the right, but not the obligation, to buy or sell the commodity or underlying instrument at a specified price on or before a specified date. In the case of an American, European or Asia option style, one exercise date is reported. In the case of a Bermudian option style, several dates may be reported.”

The issue:

1)  How should market participants report strip options?

2)  What is the reporting guidance from ACER for fields #44 Option Style and #46 Option Exercise date (Table 1) in regards to strip options? According to TRUM guidance, only Bermudian options can have more than one exercise date. For European option style, only one exercise date is required to be reported based on same text in TRUM.

Example:

Business Case: Market Participant A is trading strip options European style.

According to Market Participant A’s perspective, a strip option of the European style is a series of vanilla European options (a series of European puts or a series of European calls) on a number of consecutive contracts (e.g. January, February and March), each with the same strike price, but with a different expiry date.

Example: A strip option is concluded for delivery in January/February/March (three consecutive months). There are three exercise dates; each exercise date is two days before delivery start (e.g. 29th of December for delivery in January, 30th of January for delivery in February, 27th of February for delivery in March). Market Participant A has the right, but not the obligation, to exercise the option with delivery for January on 29th of December. In line with that, on 30th of January Market Participant A has the right, but not the obligation to exercise the option for delivery for February with the same strike price, and the same for delivery in March.

According to our current interpretation strip options are a kind of concatenated European style options, thus our interpretation is the report in the following manner:

  • Field #44 Option Style: Report as “European option style”
  • Field #46 Option Exercise Date: Report all relevant exercise dates of the strip option in this field, i.e. not just one exercise date as per the existing ACER guidance.

We would be grateful for ACER’s views on this envisioned approach, please.


Answer:

[UPDATED] to clarify Option Style of strip options

[Added] Since the introduction of the validation rule 2AODOEDR2x (in June 2017) – which prevents the reporting of records with a Contract Delivery Start Date prior to Contract Option Exercise Date unless the Option Style is ‘O’ for Other – strip options should be reported with Option Style ‘O’.

We understand that the option described above can be reported as:

  • Field #44 Option Style: “Other” “European option style”
  • Field #46 Option Exercise Date: the field should be repeated three times, where each value corresponds to a different exercise date, relevant to the individual delivery period (see below)
  • Fields #49 and #50 Delivery Start/End Date: these two fields should also be repeated three times, once for each corresponding delivery period (in this case it is one month per each delivery period).

The example below clarifies further the way to report the three fields above.

faqs-on-transaction-reporting-question-ii-3-3-2-table

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FAQs on transaction reporting – Question II.3.4.5 [DELETED]

The question was deleted due to duplication.

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FAQs on transaction reporting – Question II.3.4.9

Is an execution message required for a delivery period without supplied volumes?

A non-standard contract provides the client with flexible rights to offtake the quantity. During a certain period (especially summer period for gas) there is no delivery under the contract.

Page 20 of the TRUM and FAQ 3.1.1 requires to report update messages of the table 2 contract as soon as the market participants are aware about the “outright volume and price for transactions executed within the framework of non-standard contracts”. This does not explicitly refer to positive volumes. Our interpretation is that also periods without delivery should be reported to ensure that a report for all periods is available. But this would lead to zero values for field 41 of the execution messages which might be contradicting to the opinion of the open letter.


Answer:

Market participants should report the delivered energy as indicated in the execution report. When there is no delivery, there is no need to report execution.

However, where the framework of a non-standard contract allows for the sale and purchase of energy under the same contract, market participants should NOT net those EXECUTIONS, as they may in some circumstances lead to 0 (zero) volume at the end of the month.

Market participants should report the sold and bought volumes separately with different EXECUTIONS reports.

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FAQs on transaction reporting – Question II.3.5.7

FAQ Question 3.1.17 states that for a Phase 2 reports in the Table 1 format that a change in UTI may be implemented through a modification of the existing report using either the <previousUniqueTransactionIdentifier>  for the Version 1 schema or the < additionalUtiInfo> field in the case of the Version 2 schema. The following question has been raised: For Table 1 Phase 2 reports is this process mandatory, or can the Phase 1 Table 1 process of erroring out the first report and resubmitting a new report with a new UTI (without a link to the previous UTI) be used as an alternative process?

Practical example: a new Phase 2 Table 1 report is successfully submitted by an MP but subsequently they wish to correct the UTI after discussion with the counterparty. They submit a report for that UTI with ActionType = “E” and they then submit a new report for the same deal with a new UTI (matching the counterparty’s UTI) with ActionType = “N”, they do NOT include any information about the original report or its UTI in the newly submitted report. Is this an acceptable process for correcting the UTI?


Answer:

Market participants should clearly distinguish the Error “E” from the Modification “M” case. As indicated in the TRUM, “E” for Error should be used to denote a cancellation of a wrongly submitted report, while “M” for Modification should be used for the modification of the details of a previously reported contract.

In order to correct the UTI that was wrongly submitted, the original report needs to be cancelled with Action type “E” and a new report with a new UTI (matching the counterparty’s UTI) has to be submitted for the same deal with Action type “N”. The new report does not have to include any information about the original report or its UTI, since the original report was wrongly submitted in the first place.

However, with regard to Question 3.1.17 of the FAQs on REMIT transaction reporting, if a market participant’s counterparty provides the UTI after T+1 day or T+1 month, or alternatively not at all, the market participant who is reporting its reports should submit a temporary UTI. Once they have received the UTI from their counterparty, a ‘Modify’ report should be submitted to modify the previous report, recalling the old UTI.

If a report is due to be reported on a T+1 day basis, all life cycle events related to that report have to be reported on a T+1 day basis. Otherwise, if a new report is due to be reported on a T+1 month basis, all life cycle events related to that report have to be reported on a T+1 month basis. Examples of ’modification‘, ’early termination‘ and ’error‘ reports are available in Annex II to the TRUM.

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FAQs on transaction reporting – Question II.2.2.12

A question on behalf of a Market Participant who has traded a gas Swing deal with us (we are an OMP).

There is an assumption that the clients have to report the deliveries that result from the daily exercise/nominations on the swing deal – this is shown in your Annex II examples for bilateral swing deals as 26.01 (swing deal) and 26.02 (execution reports for deliveries) – however, there are no examples for reporting any deliveries from an OMP traded swing deal.

Since an OMP traded swing deal cannot be reported on Table 2, then the rules as they currently stand imply that you cannot use the Table 1 report “executions on a non-standard contract” in the same way as if you had a bilateral Swing deal, because the OMP traded deal is “Standard” by REMIT definitions.

Firstly, can you confirm that clients are expected to report the deliveries resulting from Nomination/Exercise of Swing rights?

Secondly, if the answer to question 1 is true then can you advise how this should be done?

Practical example:

A TTF Cal17 Buyer’s Swing

Hourly Quantity Minimum  0MWh

Hourly Quantity Maximum 300MWh

Total Contract Quantity Minimum 720,000MWh

Total Contract Quantity Maximum 720,000MWh

(i.e. 100% take or pay)

Nominated on UK Working days

(Note that this deal if brokered could be identical in characteristics to a bilateral deal direct between counterparties, which would be reported on Table 2 and executions on Table 1 as EXECUTION reports.)


Answer:

Based on the information available to us, the assumption that the clients have to report the deliveries that result from the daily exercise/nominations on the swing deal may not be applicable to this case. It depends on whether the option exercise results into the exercise of nominations or into the exercise of a forward contract that leads to nominations. If the former is the case, there is no need to report additional information. If the latter is the case, the contract results into a new forward contract and then this should be reported. Please see Question 1.1.12 of our  FAQ on transaction reporting document.

As pointed out in the question, since the OMP traded swing deal cannot be reported on Table 2, a workaround to report such swing trades should be applied. For example, we would recommend:

The option should be reported with “Other” in the Option Style field (as opposed to European/American etc.). The Exercise Date field (a repeatable field) should be used to list all the exercise dates.

The premium should be reported as an amount per unit of energy, the same way as a regular Option premium would be reported and in order to report the key additional parameters of the deal the Extra field should be used to provide value pairs. With regard to the use of field “Extra”, this should not be used in other ways unless previously discussed and agreed with ACER.  Please also note that Table 1 Schema V1 is different than T1 Schema V2.

For the following fields for hourly delivery contracts:

HourlyQmin= Hourly Quantity Minimum  0MWh

HourlyQmax= Hourly Quantity Maximum 300MWh

TotalCQmin=Total Contract Quantity Minimum 720,000MWh

TotalCQmax=Total Contract Quantity Maximum 720,000MWh

Example:

Schema Table 1_V1:

<Extra>HourlyCQmin_0MWh HourlyCQmax_300MWh TotalCQmin_720000MWh TotalCQmax_720000MWh</Extra>

Schema Table 1_V2:

<Extra>HourlyCQmin==0MWh;HourlyCQmax==300MWh;TotalCQmin==720000MWh; TotalCQmax==720000MWh</Extra>

Or for daily delivery contacts such as gas:

DailyQmin= Daily Quantity Minimum  0MWh

DailyQmax= Daily Quantity Maximum 24000MWh

TotalCQmin=Total Contract Quantity Minimum 720,000MWh

TotalCQmax=Total Contract Quantity Maximum 720,000MWh

Example:

Schema Table 1_V1:

<Extra>DailyCQmin_0MWh DailyCQmax_300MWh TotalCQmin_720000MWh TotalCQmax_720000MWh</Extra>

Schema Table 1_V2:

<Extra>DailyCQmin==0MWh; DailyCQmax==300MWh;TotalCQmin==720000MWh; TotalCQmax==720000MWh</Extra>

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FAQs on transaction reporting – Question II.3.1.48

XXX is considering to supply (i.e. sell) liquefied natural gas (LNG) to wholesale customers by means of LNG trucks. For this purpose, XXX will enter into one or more LNG sales agreements with one or more wholesale customers.

Do the above-mentioned LNG sales agreements between XXX and its wholesale customers qualify as transactions which are required to be reported to ACER in accordance with Article 8(1) of REMIT in conjunction with Article 3 of REMIT Implementing Regulation (EU) No 1348/2014?

Example: XXX will transport and deliver the LNG sold under such agreements to these wholesale customers by means of LNG trucks (i.e. in trucks that are suitable for the transportation of certain volumes of LNG).

Please note that the delivery point is neither the truck loading facility nor the fuelling station but it is potentially any physical point between the truck loading facility and the flange of the unloading facility where the LNG has to be delivered (and possibly re-gasified) on behalf of the wholesale customer.

As already expressed by ACER in the FAQs on fundamental data and inside information document (Q. 3.2.2) “LNG truck loading is out of scope for reporting fundamental data reporting. For the same reason, the Agency believes that transaction for the supply to LNG trucks are non-reportable.”

Given that, in our opinion it is not entirely clear, reason for which we are asking a further clarification, what “supply to LNG trucks” means exactly in this context (supply to trucks might mean from storage to truck or from a fuelling station to an LNG powered truck).

In our opinion any transaction where LNG is delivered either “to truck” or “by truck” or “in truck” has not to be reported.


Answer:

In the FAQs on transaction reporting document (Question II.3.1.26) it is written:

“The Agency has already clarified in the FAQs on fundamental data and inside information document (Q. 3.2.2) that LNG truck loading is out of scope for reporting fundamental data reporting.

For the same reason, the Agency believes that transaction for the supply to LNG trucks are non-reportable.” 

Please note that this answer only addresses the “loading” of LNG trucks issue raised in Question 3.1.26:

“Downstream LNG transactions, for example LNG truck loading and LNG marine fuel deliveries. These transactions are in scope as they are understood to take place at or after the entry flange of an EU LNG regasification terminal. Similar guidance to pipeline gas applies for reporting.”

However, the case described in Question II.3.1.26 is different than the one described in the above question.

In general, if the LNG is sold to a truck, it may not be reportable – see Question II.3.1.26. However, if the LNG is sold from the truck to any system connected to the network (e.g. National Transmission System, Distribution Network, LNG facility, storage etc.), then the contract would be reportable.

In any case when the contract counterparties are already REMIT market participants and if there are any doubts regarding the reporting, we would recommend to report the transaction, even if the other counterparty would not do so.

In this case the reporting market participant(s) would not take the risk of not reporting a reportable contract according to REMIT. The EIC for the destination delivery point (or the National Transmission System, Distribution Network, LNG facility, storage etc. connected to) can be reported in this case.

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FAQs on transaction reporting – Question II.3.1.49

What constitutes “delivery” for the purposes of REMIT? We are particularly interested in what constitutes the delivery in the context of LNG supplies.

According to ACER’s Q&A (III.3.36), “ACER considers any importation or offloading of LNG in any LNG facility (including flanges that connect the LNG vessel to the LNG terminal) in the EU as delivery in the Union as far as the delivery of the product takes place in the European Union“. This suggests that “delivery” means the physical delivery of the product.

However, in FAQ #3.1.21, ACER states that “in the Agency’s view contracts for the supply of LNG before the entry flange of an EU LNG regasification terminal, for example an exchange of title on the high seas outside the EU, are not subject to transaction reporting“. This suggests that title transfer constitutes delivery of the product.

We note that Incoterms definitions, which are commonly used in the LNG sector, of delivery relate to the physical delivery / transfer of risk and are silent on transfer of title, separating the concept of delivery into two. For example,

In a DES transaction “delivery” occurs at the time when the goods are placed at the disposal of the buyer on board the vessel at the named port of destination in such a way as to enable them to be removed from the vessel by the buyer. At the point of delivery, the risks transfer from the seller to the buyer. In a DES scenario, delivery is tied to the physical delivery / transfer of risk, and not to the transfer of title; and

In an FOB transaction, “delivery” occurs at the time when the goods are on board the vessel at the named port of shipment (i.e. the location where the LNG is passed over the ship’s rail). At the point of delivery, the risks transfer from the seller to the buyer. Again, in an FOB scenario, delivery is tied to the physical delivery / transfer of risk, and not to the transfer of title.

Does REMIT distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG?

Example 1:

A contract for the supply of LNG has the following characteristics:

transfer of title between the buyer and the seller happens in international waters; and after the title is transferred to the buyer, the seller delivers on a DES basis to the flange of an EU regasification terminal.

Is this contract subject to REMIT? Does the seller have to register as a market participant / report this transaction?

Example 2:

A contract for the supply of LNG has the following characteristics:

the seller delivers the goods on an FOB basis; the named port of shipment is outside of the EU; and transfer of title to the goods happens in the EU.

Is this contract subject to REMIT? Does the seller have to register as a market participant / report this transaction?


Answer:

In the Agency’s view, REMIT does not distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG. We believe that market participants know where the delivery takes place and they should be able to derive their own conclusions.

In addition, whenever market participants (MP) may have any doubts about the delivery point, we would recommend (MP A) to report the transaction in any case, even if the other counterparty (MP B) would not agree with (MP A). In this case (MP A) would not take the risk of not reporting a reportable contract according to REMIT. The EIC for the destination delivery point can be reported in this case.

We also recommend market participants to read Questions 3.1.21, 3.1.22, 3.1.23 and 3.1.24 of the FAQs on transaction reporting document which, in the Agency’s view, would help to understand the scope of LNG contracts under REMIT.

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FAQs on transaction reporting – Question II.3.5.6

We experienced several novations in the past and were confronted with different proposals on how to report such events to ACER. Could you please further specify the different data fields which need to be populated?

Could you please provide more clarity about the precise reporting requirements in case of novation? What values have to be reported?

Supply contract for gas for 1.4.16-1.4.17 was concluded on 15.02.2016. Novation agreement was signed on 15.12.2016 with effective date on 01.01.2017.

For the old transaction the following scenarios are possible:

Scenario Start of delivery End of delivery Contract date Termination date Event
(fields table 1 / 2) (# 49 / # 42) (# 50 / # 43) (#30 / #12) (#43 / – ) (# 58 / #45)
Reported 1.4.16 1.4.17 15.2.16   NEW
A 1.4.16 1.4.17 15.12.16 1.1.17 Cancel
B 1.4.16 1.1.17 15.12.16 1.1.17 Cancel
C 1.4.16 1.1.17 15.12.16   Modify

 

For the reporting of the new contracts the following scenarios are possible:

Scenario Start of delivery End of delivery Contract date Event
(fields table 1 / 2) (# 49 / # 42) (# 50 / # 43) (#30 / #12) (# 58 / #45)
I 1.4.16 1.4.17 10.2.16 NEW
II 1.4.16 1.4.17 15.12.16 NEW
III 1.1.17 1.4.17 10.2.16 NEW
IV 1.1.17 1.4.17 15.12.16 NEW

 


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, MP1 and MP2 have to submit an early termination report with Action Type “C” to cancel the old trade and MP1 and MP3 have to provide a new submission with Action Type “N” for the new trade between MP1 and MP3 with a new UTI. In addition:

  • The early termination should be reported with the timestamp/contract date of the early termination agreement day.
  • The termination date refers to the date the contract ceases to exist, and not the agreement date (timestamp/contract date, see above).
  • “Modify” should not be used.

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