Do final customers need to include the name and location of an asset when publishing inside information notifications?
As the disclosure obligation according to Article 4(1) of REMIT falls on market participants, final customers should first asses if they qualify as market participants according to REMIT considering the threshold set in Article 2(5) of REMIT.
The market participants shall publish inside information pursuant to Article 4(1) of REMIT. Chapter 7.2.2 of the ACER Guidance on the application of REMIT (4th edition) describes the minimum quality requirements for effective disclosure of inside information that includes the disclosure of the name and location of the asset concerned.
However, Article 4(4) of REMIT stipulates that the publication of inside information, including in aggregated form, in accordance with Regulation (EC) No 714/2009 or (EC) No 715/2009, or guidelines and network codes adopted pursuant to those Regulations constitutes simultaneous, complete and effective public disclosure.
The Agency points out that although it acknowledges application of Article 4(4) of REMIT, i.e. publication of inside information in aggregated form, the final customer, as any other market participant in question, needs to ensure that it publishes inside information in line with the requirements specified in Regulation (EC) No 714/2009 or (EC) No 715/2009, in an effective and timely manner. Further detail on the concept of timely disclosure may be found in Section 7.3 of the ACER Guidance.
Last update: 16/06/2017
How can a market participant (Company A) fulfil its obligations under Article 4 of REMIT and comply with the prohibition under Article 3 of REMIT when:
(i) Company A holds an inside information relating to Company B’s facility (Company B is NOT a market participant);
(ii) Company A holds an inside information on the asset of another market participant (Company C). Company C does not consider the information to be inside information. However, Company A considers that this information meets the definition of inside information pursuant to Article 2(1) of REMIT, wherein the companies are not parent/related undertakings.
According to the 4th updated edition of the ACER Guidance on the application of REMIT (‘’ACER Guidance’’, p. 41): ‘’the obligation to disclose inside information does not apply to a person or a market participant who possesses inside information in respect of another market participant’s [or other entity’s] business or facilities, in so far as that owner of this inside information is not a parent or related undertaking. Notwithstanding this, persons holding information in such circumstances will need to consider their compliance with Article 3 and in particular whether they hold such information as one of the persons listed in Article 3(2).’’
Therefore, if the information qualifies as inside information, Company A will need to consider its compliance with Article 3 of REMIT (prohibition of insider trading). In particular, Company A could hold such inside information as one of the persons listed in Article 3(2) of REMIT (e.g. persons with access to the information through the exercise of their employment, profession or duties under Article 3(2)(c) of REMIT).
Regarding case i), provided that the inside information is not published by Company B (it is not a REMIT market participant with obligations under Article 4(1) of REMIT), Company A will not be allowed to trade using such inside information as this would cause a potential breach of Article 3 of REMIT (insider trading).
The Agency considers that Company A should also assess if it holds any other information concerning their own business or facilities that could qualify as inside information that should be published pursuant to Article 4(1) of REMIT. In addition, the Agency would consider as best practice that Company B provides Company A with all necessary information about its activities which affect or may affect Company A, through contractual arrangements between the two, e.g. via a specific agreement or clause in the contract existing between both companies. This should aim at facilitating Company A to publish inside information which is precise, in case Company B holds information that affects Company A’s activities.
Regarding case ii), the Agency considers that Company A should fulfil its obligations of publishing the part of the inside information which concerns its own business or facilities pursuant to Article 4(1) of REMIT. In addition, the Agency would consider as best practice if Companies A and C exchange between themselves all necessary information about their activities which affect or may affect the other company, through contractual arrangements between the two, e.g. via a specific agreement or clause in the contract existing between both companies. This should aim at facilitating both companies to publish inside information in case one company holds information that affects the other company’s activities.
Finally, please note that the Agency reserves the right to review the guidance on the disclosure of inside information in respect of another entity’s business or facility in the future.
Last update: 16/06/2017