Changes from report parliamentary committee draft to plenary report

DRAFT EUROPEAN PARLIAMENT LEGISLATIVE RESOLUTION

Changedon the proposal for a regulation of the European Parliament and of the Council amendingAmending Regulations (EU) No 1227/2011 and (EU) 2019/942 to improve the Union’s protection against market manipulation in the wholesale energy market

▸6 unchanged paragraphs

(COM(2023)0147 – C90050/2023 – 2023/0076(COD))

(Ordinary legislative procedure: first reading)

The European Parliament,

– having regard to the Commission proposal to Parliament and the Council (COM(2023)0147),

– having regard to Article 294(2) and Article 194(2) of the Treaty on the Functioning of the European Union, pursuant to which the Commission submitted the proposal to Parliament (C90050/2023),

– having regard to Article 294(3) of the Treaty on the Functioning of the European Union,

Changed– having regard to the opinion of the European Economic and Social Committee of ...14 ,June 2023,

Change 1

Changed– having regard to the opinionafter ofconsulting the Committee of the Regions of ... ,Regions,

– having regard to Rule 59 of its Rules of Procedure,

– having regard to the opinion of the Committee Economic and Monetary Affairs,

– having regard to the letter from the Committee on Budgets,

Changed– having regard to the report of the Committee on Industry, Research and Energy (A90000/2023),(A9-0261/2023),

1. Adopts its position at first reading hereinafter set out;

2. Calls on the Commission to refer the matter to Parliament again if it replaces, substantially amends or intends to substantially amend its proposal;

3. Instructs its President to forward its position to the Council, the Commission and the national parliaments.

Change 2

RemovedRecital 1: (1) Open and fair competition in the internal markets for electricity and for gases and ensuring a level playing field for market participants requires integrity and transparency of wholesale energy markets. Regulation (EU) No 1227/2011 of the European Parliament and of the Council establishes a comprehensive framework (‘REMIT’) to achieve this objective. To enhance the public’s trust in functioning energy markets and to protect the Union effectively against market abuse, Regulation (EU) No 1227/2011 should be amended to further increase transparency and monitoring capacities as well as to ensure more effective investigation and enforcement of potential cross-border market abuse cases addressing the shortcomings identified in the current framework.

AddedAMENDMENTS BY THE EUROPEAN PARLIAMENT*

RemovedUnion protection should not be limited only to the ‘attempts of market manipulation’. Market abuse is more appropriate notion covering market manipulation, attempts of market manipulation and insider trading. It is not necessary to stress that transparency and monitoring capacities are insufficient, which is debatable and besides gives the impression that the current framework is completely non-operational which is not true. It is enough to highlight that they could be further increased.

Addedto the Commission proposal

RemovedRecital 2: (2) Financial instruments, including energy derivatives, traded on energy markets are of increasing importance. Due to the increasingly close interrelation between financial markets and energy wholesale markets, Regulation (EU) No 1227/2011 should be better aligned with the financial market legislation such as Regulation (EU) No 596/2014 of the European Parliament and of the Council17, including with respect to the definitions of market manipulation and inside information respectively. More specifically the definition of market manipulation in Regulation (EU) No 1227/2011 should be slightly adjusted to mirror Article 12 of Regulation (EU) No 596/2014. To that end, the definition of market manipulation under Regulation (EU) No 1227/2011 should be adjusted to capture the entering into any transaction, or issuing any order to trade, but also any other behaviour relating to wholesale energy products which: (i) gives, or is likely to give, false signals as to the supply of, demand for, or price of wholesale energy products; (ii) secures, or is likely to secure, by a person, or persons acting in collaboration, the price of one or several wholesale energy products at an artificial level, or (iii) employs a fictitious device or any other form of deception or contrivance which gives, or is likely to give, false signals regarding the supply of, demand for, or price of wholesale energy products.

Added---------------------------------------------------------

RemovedRecital 3: (3) The definition of inside information should also be adjusted to be in line with Regulation (EU) 596/2014. In particular, where inside information concerns a process which occurs in stages, each stage of the process as well as the overall process could constitute inside information. An intermediate step in a protracted process may in itself constitute a set of circumstances or an event which exists or where there is a realistic prospect that they will come into existence or occur, on the basis of an overall assessment of the factors existing at the relevant time. However, that notion should not be interpreted as meaning that the magnitude of the effect of that set of circumstances or that event on the prices of the wholesale energy products concerned must be taken into consideration. An intermediate step should be deemed to be inside information if it, by itself, meets the criteria laid down in this Regulation for inside information.

AddedProposal for a

RemovedThe EC mistakenly refers to financial instruments while it should refer to wholesale energy products.

AddedREGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

RemovedRecital 6 a (new): (6a) Market participant, within the meaning of Regulation (EU) No 1227/2011, should be understood as any person, including transmission system operators, distribution system operators, storage system operators and LNG system operators, who enters into transactions in one or more wholesale energy markets. However, when distribution system operators, storage system operators and LNG system operators do not enter into transactions with regard to wholesale energy products, they should become exclusively subject to the relevant disclosure obligations under Article 4 and Article 8(5) of Regulation (EU) No 1227/2011.

Addedamending Regulations (EU) No 1227/2011 and (EU) 2019/942 to improve the Union’s protection against market manipulation in the wholesale energy market

RemovedThe recital aims to clarify the inclusion of DSOs, LNG system operators and SSOs within the definition of market participant.

Added(Text with EEA relevance)

RemovedRecital 6 b (new): (6b) Market participants should report to the Agency the data regarding the contracts for the supply of electricity or natural gas, which may result in an effective physical delivery in the Union.

AddedTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

RemovedRecital 8: (8) The use of trading technology has evolved significantly in the past decade and is increasingly used on the wholesale energy markets. Many market participants use algorithmic trading and high frequency algorithmic techniques with minimal or no human intervention. The risks arising from these practises should be addressed under Regulation (EU) No 1227/2011. However, it is important to specify that the provisions of Regulation (EU) No 1227/2011 regarding algorithmic trading do not apply to transmission system operators' areas of activity that use automation, e.g. activation of balancing energy, insofar those automated processes are addressed by the Commission Regulation (EU) 2017/21951a. / 1a Commission Regulation (EU) 2017/2195 of 23 November 2017 establishing a guideline on electricity balancing (OJ L 312 28.11.2017, p. 6).

AddedHaving regard to the Treaty on the Functioning of the European Union, and in particular Article 194(2) thereof,

RemovedTSOs use automation in their processes but is better to specify that the new article on algorithmic trading does not apply to their activities are already covered by Commission Regulation 2017/2195.

AddedHaving regard to the proposal from the European Commission,

RemovedRecital 10: (10) To improve the Agency’s market monitoring and make data collection more complete, the current reporting regime needs improvement. The data collected should be expanded to overcome gaps in the data collection and include coupled markets, new balancing markets, contracts for balancing markets and products that have potential delivery in the Union. Organised market places should be required to provide the full order book data set to the Agency.

AddedAfter transmission of the draft legislative act to the national parliaments,

RemovedIt will be ineffective to introduce order book providers as PPATs. In integrated balancing markets, orders and bids from all national procurement systems are anonymised. Operators of balancing platforms, and other member TSOs, have no tools to identify market abuse or unusual behaviour. In the current TSO-TSO model for balancing markets, all operations related to “orders” take place at national level, as does surveillance of orders. Moreover, cross-border surveillance obligation for any PPAT would require high investments in IT solutions, with no additional utility in return.

AddedHaving regard to the opinion of the European Economic and Social Committee,

RemovedRecital 11: (11) Inside Information Platforms (IIPs) should play an important role for the effective and timely publication of inside information. It should be mandatory for market participants to disclose inside information on dedicated IIPs to make the information easily accessible and enhance transparency. To ensure trust in the IIPs they should be authorised and registered. However, market participants should not be held responsible, nor liable with respect to the obligation to disclose inside information, in case of temporary technical problems of duly registered and authorised IIPs or for any publication error caused by the IIP, provided that the information was transmitted to the IIP in time and in line with the requested format.

AddedHaving regard to the opinion of the Committee of the Regions,

RemovedBased on the Guidance on REMIT application issued by ACER, is important to clarify that market participants are not responsible for technical problems of the IIP. If the information was transmitted to the platform in time and there were technical problems, the market participant should therefore not be considered having breached the obligation to disclose inside information. In addition, market participant can’t be held responsible for any publication error caused by the IIP.

AddedActing in accordance with the ordinary legislative procedure,

RemovedRecital 14: (14) Persons professionally arranging transactions have the obligation to report suspicious transactions in breach of the provisions on insider trading and market manipulation. To enhance the possibility of enforcement of such breaches, the persons professionally arranging transactions should also have the obligation to report suspicious orders and potential breaches of the obligation to publish inside information. Direct electronic access providers and shared order-book providers should not be considered to be persons professionally arranging transactions.

AddedWhereas:

RemovedThe provision of direct electronic access to 3rd parties (clients) does not typically represent arranging transactions. Direct electronic access means that a market participant or a member of a trading venue allows a legal entity to use its trading code (access). As a result, this legal entity can pass orders directly to a trading venue, thereby making use of the infrastructure of the provider or a connection system that has been made available by the market participant. But all orders and transactions remain in the name of the entity providing the access.

Added(1) Open and fair competition in the internal markets for electricity and for gases and ensuring a level playing field for market participants requires integrity and transparency of wholesale energy markets. Regulation (EU) No 1227/2011 of the European Parliament and of the Council establishes a comprehensive framework (‘REMIT’) to achieve this objective. To enhance the public’s trust in functioning energy markets and to protect the Union effectively against ▌market abuse, Regulation (EU) No 1227/2011 should be amended to further increase ▌transparency and strengthen monitoring capacities, thereby contributing to the stabilisation of energy prices and consumer protection, as well as to ensure more effective investigation and enforcement of potential cross-border market abuse cases addressing the shortcomings identified in the current framework.

RemovedRecital 16: (16) In order to obtain an accurate, objective and reliable assessment of the price for LNG deliveries to the Union, the Agency should collect all the relevant LNG market data that are necessary to establish a daily LNG price assessment and benchmark. The price assessment and benchmark should be undertaken based on all transactions pertaining to relevant LNG deliveries into the Union. ACER should be empowered to collect this market data from all participants active in LNG deliveries to the Union. All such participants should be obliged to report a record of their LNG market data to ACER. Once established, the LNG price assessment and the benchmark could also become a reference rate for derivatives contracts used for hedging the price of LNG or the difference in price between the LNG price and other gas prices. ACER should minimise the burden imposed on LNG market participants by optimising the collection process of the relevant data through the existing sources and reporting mechanisms already in place in accordance with Regulation (EU) No 1227/2011.

Added(2) Financial instruments, including energy derivatives, traded on energy markets are of increasing importance. Due to the increasingly close interrelation between financial markets and energy wholesale markets, Regulation (EU) No 1227/2011 should be better aligned with the financial market legislation such as Regulation (EU) No 596/2014 of the European Parliament and of the Council, including with respect to the definitions of market manipulation and inside information respectively. More specifically the definition of market manipulation in Regulation (EU) No 1227/2011 should be slightly adjusted to mirror Article 12 of Regulation (EU) No 596/2014. To that end, the definition of market manipulation under Regulation (EU) No 1227/2011 should be adjusted to capture the entering into any transaction, or issuing any order to trade, but also any other behaviour relating to wholesale energy products which: (i) gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products; (ii) secures, or is likely to secure, by a person, or persons acting in collaboration, the price of one or several wholesale energy products at an artificial level, or (iii) employs a fictitious device or any other form of deception or contrivance which gives, or is likely to give, false or misleading signals regarding the supply of, demand for, or price of wholesale energy products.

RemovedIn line with the amendments tabled on LNG-related definitions and articles, it is necessary to adapt the concerned recital, underlining that the proposed modifications are done in order to optimise the process of collecting LNG data using as much as possible the reporting mechanisms already in place.

Added(3) The definition of inside information should also be adjusted to mirror Regulation (EU) 596/2014. In particular, where inside information concerns a process which occurs in stages, each stage of the process as well as the overall process could constitute inside information. An intermediate step in a protracted process may in itself constitute a set of circumstances or an event which exists or where there is a realistic prospect that they will come into existence or occur, on the basis of an overall assessment of the factors existing at the relevant time. However, that notion should not be interpreted as meaning that the magnitude of the effect of that set of circumstances or that event on the prices of the wholesale energy products concerned must be taken into consideration. An intermediate step should be deemed to be inside information if it, by itself, meets the criteria laid down in this Regulation for inside information. The Commission should be able, by means of delegated acts, to further specify the definition of inside information. There should be a contact point at the Agency for market participants seeking clarification on whether specific information would constitute inside information pursuant to Regulation (EU) No 1227/2011 and the relevant delegated acts adopted pursuant thereto.

RemovedRecital 17: (17) Delegation of tasks and responsibilities can be an effective instrument to reduce duplication of tasks, foster cooperation and reduce the burden imposed on market participants. Therefore a clear legal basis should be provided for such delegation. Where this does not entail excessive administrative burden on market participants, national regulatory authorities should be able to delegate tasks and responsibilities to another national regulatory authority. Introducing specific conditions and limiting the scope for the delegation to what is necessary for the effective supervision of cross-border market participants or groups should be possible. Delegations should be governed by the principle of allocating competence to an authority which is best placed to take action on the subject matter.

Added(4) This Regulation is without prejudice to Regulations (EU) 596/2014, 600/2014 and 648/2012, and Directive (EU) 2014/65 as well as to the application of European competition law to the practices covered by this Regulation.

RemovedRecital 20: (20) Market abuse cases involving multiple cross-border elements and market participants established outside the Union are also particularly challenging from an enforcement perspective. The current supervisory set-up is not appropriate for the desired level of market integration. The absence of a mechanism to ensure the best possible supervisory decisions for cross-border cases, where joint action by national regulatory authorities and the Agency currently requires complicated arrangements and where there is a patchwork of supervisory regimes must be addressed. There is a need to set up an efficient and effective supervisory and investigatory regime for that type of market abuse cases, which cannot, due to its Union-wide features, be addressed by Member State action alone, in particular where the national regulatory authorities are not already taking action.

Added(5) Sharing of information between national regulatory authorities and the national competent financial authorities is a central aspect of cooperation and detection of potential breaches in both the wholesale energy markets and the financial markets. In the light of the exchange of information between competent authorities pursuant to Regulation (EU) 596/2014 at national level, national regulatory authorities should share relevant information they receive with national financial and competition authorities.

RemovedRecital 22: (22) The Agency should be empowered to carry out investigations by conducting on-site inspections and by issuing requests for information to the persons under investigations, in particular where the suspected breaches of Regulation (EU) No 1227/2011 have a clear cross-border dimension. In undertaking the on-site inspections and in issuing requests for information to the persons under investigations, the Agency should closely and actively cooperate with the relevant national regulatory authorities, which in turn should provide the Agency with full assistance, including where a person refuses to be subject to the inspection or to provide the requested information. It is important that the procedural guarantees and fundamental rights of the persons subject to the Agency’s investigations are fully respected. The confidentiality of the information submitted by the persons subject to the investigation should be safeguarded exchanged in accordance with applicable Union data protection rules.

Added(6) Where information is not, or no longer, sensitive from a commercial or security viewpoint, the European Agency for the Cooperation of Energy Regulators (the ‘Agency’▌) should be able to make that information available to market participants and the wider public in an accessible format with a view to contributing to enhanced market knowledge. This should include the possibility for the Agency to publish information on organised market places, IIPs, RRMs in accordance with applicable data protection law in the interest of improving transparency of wholesale energy markets and provided it does not distort competition on those energy markets.

RemovedLinguistic amendment