Q&As on REMIT – Question II.3.1.

What is market abuse?


Answer:

The definitions in REMIT are based on the definitions in MAD[1], but tailored to the gas and electricity markets. Market abuse means insider dealing and market manipulation, which have become explicitly prohibited with the entry into force of REMIT.

The following seven types of behaviour may amount to market abuse, the first three of which relate to insider trading, the last four to market manipulation, including attempted market manipulation:

1. insider trading – when an insider trades, or tries to trade, on the basis of inside information;

2. improper disclosure of inside information – where an insider improperly discloses inside information to another person, unless such disclosure is made in the normal course of the exercise of their employment, profession or duties;

3. recommending on the basis of inside information – where an insider is recommending or inducing another person, on the basis of inside information, to acquire or dispose of wholesale energy products to which that information relates;

4. false/misleading transactions – trading, or placing orders to trade, which gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products;

5. price positioning – trading, or placing orders to trade, which secures or attempts to secure, by a person, or persons acting in collaboration, the price of one or several wholesale energy products at an artificial level, unless the person who entered into the transaction or issued the order to trade establishes that his reasons for doing so are legitimate and that that transaction or order to trade conforms to accepted market practices on the wholesale energy market concerned;

6. transactions involving fictitious devices/deception – trading, or placing orders to trade, which employs fictitious devices or any other form of deception or contrivance; and

7. dissemination of false and misleading information – giving out information that conveys a false or misleading impression about a wholesale energy product where the person doing this knows the information to be false or misleading.


[1] Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions for market abuse (market abuse directive, MAD).

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Q&As on REMIT – Question II.3.2.

What is inside information?


Answer:

Article 2 of REMIT defines “inside information” by means of the following four criteria information of a (1) precise nature, (2) which has not been made public, (3) which relates, directly or indirectly, to one or more wholesale energy products (4) and which, if it were made public, would be likely to significantly affect the prices of those wholesale energy products.

In its non-binding Guidance on the application of the definition of inside information, the Agency considers that, in view of the current limited experiences with the application of the definition of inside information in the wholesale energy market, the notion of “inside information” should currently be primarily understood in relation to:

• information which is required to be made public in accordance with Regulations (EC) No 714/No 714/2009[1] and (EC) No 715/2009[2], including guidelines and network codes adopted pursuant to those Regulations. This includes information referred to in Commission Regulation (EU) No 543/2013[3], which amends the guidelines annexed to Regulation (EC) No 714/2009;

• information relating to the capacity and use of facilities for production, storage, consumption or transmission of electricity or natural gas or related to the capacity and use of LNG facilities, including planned or unplanned unavailability of these facilities; and

• information which is required to be disclosed in accordance with other legal or regulatory provisions at Union or national level, insofar as this information is likely to have a significant effect on the prices of wholesale energy products.

Experience will show which kind of other information is likely to have a significant effect on the prices of one or more wholesale electricity products if made public.

These considerations apply until more experience is gained about the notion of inside information in wholesale energy markets. The Agency believes that respect of the aforementioned transparency requirements is currently essential to avoid breaches of inside information rules.

Further guidance on this subject will be provided by the Agency as soon as more experience on the application of REMIT is gained, as the definition of inside information will evolve over time.


[1] Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity.

[2] Regulation (EC) No 715/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the natural gas transmission networks and repealing Regulation (EC) No 1775/2005.

[3] Commission Regulation (EU) No 543/2013 of 14 June 2013 on submission and publication of data in electricity markets and amending Annex I to Regulation (EC) No 714/2009 of the European Parliament and of the Council.

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Q&As on REMIT – Question II.3.3.

Who is considered an insider?


Answer:

According to Article 3(2) of REMIT, the prohibition of insider trading applies to the following persons who possess inside information in relation to a wholesale energy products (insider):

• members of the administrative, management or supervisory bodies of an undertaking;

• persons with holdings in the capital of an undertaking;

• persons with access to the information through the exercise of their employment, profession or duties;

• persons who have acquired such information through criminal activity; and

• persons who know, or ought to know, that it is inside information.

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Q&As on REMIT – Question II.3.4.

What are possible examples of market manipulation?


Answer:

The Agency’s non-binding guidance provides examples of the various types of practices which could constitute market manipulation and which are inspired by European energy regulators’ own experiences and the experiences in financial markets. These can therefore be taken as indicating possible signals of market manipulation in wholesale energy markets according to REMIT. These considerations apply until more experience is gained about market manipulation in wholesale energy markets.

More generally, the Agency considers that market participants’ behaviour must be coherent with their technical and economic constraints in a way to comply with competition law, especially concerning market power exercise. The cooperation of the Agency and NRAs with the competition authorities, as foreseen by REMIT, must be understood in this respect. The Agency will review its Guidance on market manipulation and publish a revised Guidance if considered appropriate.

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Q&As on REMIT – Question II.5.1.

When did REMIT come into force and into application?


Answer:

REMIT was published in the Official Journal of the EU on 8 December 2011. On 28 December, the prohibitions of insider trading and market manipulation, the obligation for market participants to publish inside information and the obligation for persons professionally arranging transactions to establish and maintain effective arrangements to detect market abuse and to notify reasonable suspicious cases to national regulatory authorities came into force.

Within 6 months of the entry into force of REMIT, i.e. by 28 June 2012, the Agency determined a format for the registration of market participants, and within 18 months, i.e. by 28 June 2013, Member States should have assigned investigatory and enforcement powers to NRAs and put in place rules on penalties applicable to infringements of REMIT.

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Q&As on REMIT – Question II.4.1.

I am a market participant. What obligations do I need to fulfil as of 28 December 2011?


Answer:

As of 28 December 2011, with the entry into force of REMIT, market participants are subject to the obligation to (1) publish inside information in an effective and timely manner; (2) notify ACER and competent NRAs in case of delayed publication of inside information. The prohibition of market manipulation, attempted market manipulation and the prohibition of insider trading also came into effect as of 28 December 2011.

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