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FAQs on transaction reporting – Question II.2.3.9

For Exchange Traded Commodity Derivatives only, executed via Direct Market Access (DMA) and cleared at a Clearing broker.

From the End Client’s point of view only, can ACER confirm that if an underlying client is not a REMIT market participant, then they themselves have no reporting obligation?

Is the DMA provider a REMIT Market participant?

How DMAs’ clients that are market participant should report their trades without reporting a back to back transaction?


Answer:

If an underlying client is not a REMIT market participant, then they themselves have no reporting obligation.

When a Clearing Broker (e.g. DMACB) offers Direct Market Access (DMA) on an exchange to its client, although it is the DMACB’s client who trades, the trade is done via the DMACB‘s membership. Therefore, it is the Agency’s understanding that the DMA provider (DMACB) should be considered a REMIT market participant within the REMIT framework as it places the order on the exchange for its client.

In the Agency’s view, a person that place an order in the exchange is a market participant even if it will not be a counterparty to the trade. Market participants that place orders on the screen of the exchange have to be identified in the trade report as responsible for the reporting of the report. This does not imply that they are counterparty to the contract, but that they are responsible for the reporting of the order or the trade. Please also see FAQs document on transaction reporting Q. II.2.1

As indicated in the TRUM Annex III “market participants should report transactions under REMIT only if those transactions are not reported under EMIR …….

As a REMIT market participant, DMACB is required to report orders and transactions (if DMACB is counterparty to the trade and not reported under EMIR) in wholesale energy derivative contracts to the Agency. It is possible that DMACB’s clients are also market participants under REMIT. This can be the case when clients have own memberships on other REMIT energy exchanges, or when they trade bilaterally any REMIT physical products.

When the exchange reports trades (not orders) on behalf of DMACB, the exchange may report the ID of the DMACB’s client as end beneficiary in field (8) Beneficiary ID. Please note that for orders there is no need to report the Beneficiary ID.

In addition, the Agency understands that DMACB ‘s clients may trade on the exchange under (1) Locally Managed Accounts (LMA) or (2) System Managed Accounts (SMA).

  1. In case of the LMA set-up, the exchange does not see the information concerning the end-user (DMACB’s client) and would report DMACB as a market participant, which means that the end beneficiary field would not be filled in. DMACB and the exchange may agree to report the DMACB’s client ID in the beneficiary field (8) if this is a market participants but only for trades not reported under EMIR and not for orders.
  2. In case of the SMA set-up, even if the exchange is able to see the identity of DMACB’s client (via an ACER code), the exchange should NOT report the ID of the DMACB’s client as market participant but as beneficiary in Field (8) Beneficiary ID if the exchange receives that assignment by the DMACB if the trade has not been reported under EMIR.

The Agency’s view is that the correct reporting should not depend on the two different set-ups (i.e. LMA or SMA), but on the definition of market participant of REMIT. Therefore when an order is placed on the DMACB’s membership the exchange should not report the ID of the DMACB’s client as a Market Participant in field (1).

Therefore when a trade is executed on the DMACB’s membership the exchange should not report the ID of the DMACB’s client as a Market Participant in field (1) but the ID of DMACB and the DMACB’s client ID in Field (8) Beneficiary ID if agreed with the DMACB and if the trade was not reported under EMIR.

Please note that for orders there is no need to report the Beneficiary ID as this applies to transaction only if not reported under EMIR.

Last update: 14/12/2016   RSS_Icon Subscribe to this Page’s RSS