Changes from report parliamentary committee draft to plenary report

Added“The Agency, national regulatory authorities, ESMA and competent financial authorities of the Member States shall ▌exchange relevant information and data on a regular, at least quarterly, basis regarding potential breaches of Regulation (EU) No 596/2014 ▌involving wholesale energy products covered by this Regulation.”;

RemovedDefinitions shall only apply to wholesale energy products that are not financial instruments to avoid unnecessary doubling of regulation and supervision, as for financial instruments MAR Article 16 applies. Deletion of "execution" wants to better take into account characteristics of physical markets in accordance with REMIT and better define differences between market participants, PPATs and OMPs. Direct electronic access providers place into the market orders of transactions that remain in the name of the entity providing the DEA service thus there is no arranging activity.

Added(ba) paragraph 4 is replaced by the following:

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Added“4. The Agency's Administrative Board shall ensure that the Agency carries out the tasks assigned to it under this Regulation in accordance with this Regulation and Regulation (EC) No 713/2009 and that the Agency has adequate staff and the ability to hire additional personnel, if necessary, to fulfil the new obligations assigned to it.”;

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 18: (18) ‘algorithmic trading’ means trading, including high frequency trading, in wholesale energy products where a computer algorithm automatically determines individual parameters of orders to trade such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission, with limited human intervention or no such intervention at all, not including any system that is only used for the purpose of routing orders to one or more organised market places or for the processing of orders involving no determination of any trading parameters or for the confirmation of orders or the post-trade processing of executed transactions;

Added(2) Article 2 is amended as follows:

RemovedHigh frequency trading is a type of algorithmic trading, so the current definition covers it. It is also mentioned in recital 8. However, to make it clearer a direct reference can be introduced in the definition.

Added(a) in point (1), the second subparagraph, the following point ▌ is inserted:

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Added“(ca) information which is conveyed by a market participant, or by other persons acting on the market participant’s behalf, to a service provider trading on the market participant’s behalf and relating to the market participant’s pending orders in wholesale energy products, which is of a precise nature and relates directly or indirectly ▌ to one or more wholesale energy products”;

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 –point 19: (19) ‘direct electronic access’ means an arrangement whereby a member, participant or client of an organised market place allows another person to use its trading code so the person may electronically transmit orders to trade relating to a wholesale energy product, which is not a financial instrument, directly to the organised market place, including arrangements which involve the use by a person of the infrastructure of the member, participant or client, or any connecting system provided by the member, participant, or client, to transmit the orders to trade (direct market access) and arrangements whereby such an infrastructure is not used by a person (sponsored access);

Added(b) the third subparagraph is replaced by the following:

RemovedThe new Article 5a shall only apply to direct electronic access relating to wholesale energy products which are not financial instruments. Otherwise, the Article 5a REMIT and the Article 17 of MiFID II would be both applicable and create an unnecessary double layer of regulation and supervision.

Added“Information shall be deemed to be of a precise nature if it indicates a set of circumstances which exists or may reasonably be expected to come into existence, or an event which has occurred or may reasonably be expected to occur, and if it is specific enough to enable a conclusion to be drawn as to the possible effect of that set of circumstances or event on the prices of wholesale energy products. Information may be deemed to be of a precise nature if it relates to a protracted process that is intended to bring about, or that results in, particular circumstances or a particular event, including future circumstances or future events, and also if it relates to the intermediate steps of that process which are connected with bringing about or resulting in those future circumstances or that future event.

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AddedAn intermediate step in a protracted process shall be deemed to be inside information if, by itself, it satisfies the criteria of inside information as referred to in this point.

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 20: (20) ‘organised market place’ or ‘OMP’ means an energy exchange, an energy broker, an energy capacity platform, or any other system or facility in which multiple third-party buying or selling interests in wholesale energy products interact in a way that may result in a transaction, including electricity and gas exchanges, brokers, energy balancing or ancillary services platforms, and other persons professionally arranging transactions and trading venues as defined in Article 4, point (24), of Directive 2014/65/EU;

AddedFor the purposes of this point, information which, if it were made public, would be likely to significantly affect the prices of the wholesale energy products means information that a reasonable market participant would be likely to use as part of the basis of his or her ▌decision(s) to enter into a transaction relating to, or to issue an order to trade in, a wholesale energy product.

RemovedWith these changes the scope of the OMP definition is clearer and avoids confusion with market participants and PPATs' definitions. It encompasses also the fact that third parties acting on behalf of energy exchange are covered. It is in line with the definition of OMP already adopted in the regulation 1348/2014, Article 2(4). It includes also a reference to the ancillary services and the energy balancing platforms.

AddedFor the purposes of this point, information that has a possible effect on the demand, supply or prices of a wholesale energy product, or on the expectations of the demand, supply or prices of a wholesale energy product, shall be considered to be directly or indirectly related to the wholesale energy product.”;

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Added(c) paragraph (2), point (a) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 20a (new): (20a) ‘order book’ means all details of wholesale energy products executed at organised market places including matched and unmatched orders as well as system-generated orders and life cycle events;

Added(2) ‘market manipulation’ means:

RemovedThis definition is missing from REMIT even though the term is used in various places in the text. The new definition clarifies the term.

Added(a) entering into any transaction, or issuing, modifying or withdrawing any order to trade or engaging in any other behaviour relating to wholesale energy products or relevant infrastructure which:

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Added(i) gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products;

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 21: (21) ‘LNG trading’ means entering into any transaction, including orders to trade in an organised market place or taking any other action relating to the purchase or sale of LNG: (a) that specify physical delivery in the Union; (b) that result in delivery in the Union; or (c) in which one counterparty re-gasifies the LNG at a terminal in the Union;

Added(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, 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; or

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Added(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;

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 22: (22) ‘LNG market data’ means records of transactions, of orders to trade and of any other action relating to the purchase or sale of LNG, with corresponding information as specified in the Implementing Regulation (EU) No 1348/2014;

Addedor

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Added(d) in paragraph (2), the following point (c) is added and preceded by the word ‘or’ at the end of point (b):

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 23: (23) ‘LNG market participant’ means any market participant that is a natural or legal person, irrespective of that person’s place of incorporation or domicile, who engages in LNG trading;

Added“(c) transmitting false or misleading information or providing false or misleading input in relation to a benchmark where the person who made the transmission or provided the input knew or ought to have known that it was false or misleading, or engaging in any other behaviour which leads to the manipulation of the calculation of a benchmark.”;

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Added(e) at the end of paragraph (2) the following subparagraph is added:

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 24: (24) ’LNG price assessment’ means the determination of a reference price for LNG trading in accordance with a methodology established by ACER;

Added“Market manipulation may designate the conduct of a legal person, or, in accordance with ▌ Union or national law, of a natural person who participates in the decision to carry out activities for the account of the legal person concerned.”;

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Added(f) in paragraph (4), point (a) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 2 – point j, Article 2 – paragraph 1 – point 25: (25) ‘benchmark’ means any index that is periodically or regularly determined by the application of a formula to, or on the basis of the value of, one or more underlying wholesale energy products, including estimated prices, by reference to which the amount payable under a wholesale energy product or a contract relating to a wholesale energy product, or the value of a wholesale energy product, is determined.

Added“(4) ‘wholesale energy products’ means the following contracts and derivatives, irrespective of where and how they are traded:

RemovedThe term “benchmark” needs to be defined for the application of the new benchmark manipulation definition. The definition is aligned with the definition of a benchmark under Article 3 point (3) of Regulation EU 2016/1011 (on indices used as benchmarks in financial instruments and financial contracts) and in line with the definition of benchmark under MAR (Regulation EU 596/2014), with the necessary adaptations to the energy market.

Added(a) contracts for the supply of electricity or natural gas, including LNG, where delivery is in the Union or contracts for the supply of electricity or natural gas, which may result in delivery in the Union, as a result of single day-ahead and intraday coupling;

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Added(aa) contracts and derivatives relating to the electricity and natural gas storage in the Union;”;

RemovedArticle 1 – paragraph 1 – point 3, Article 4 –paragraph 1 – subparagraph 1a (new): This requirement shall not apply to intermediate steps in a protracted process as referred to in Article 2(1), where those steps are connected with bringing about a set of circumstances or an event.

Added(fa) point (4) (b) is replaced by the following:

RemovedThe introduction of this concept of protracted process needs to be framed within Article 4. The market participants should only disclose the information related to the event that a protracted process intends to bring about, at the moment when such information is sufficiently precise, e.g., such as when the management board has taken the relevant decision to bring about that event, e.g., the decision to build a power plant. They shall disclose only the information relating to the event that is intended to complete a protracted process.

Added“(b) derivatives relating to electricity or natural gas produced, traded or delivered in the Union, or derivatives relating to electricity or natural gas which may result in delivery in the Union, as a result of single day-ahead and intraday coupling;”

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Added(g) paragraph (7) is replaced by the following:

RemovedArticle 1 – paragraph 1 – point 4 – point a, Article 4 –paragraph 1 – subparagraph 2 a (new): Market participants may use other channels, including market participants' websites, to disclose the inside information. Those other channels shall be used only in addition to the disclosure of the inside information through IIPs as referred to in the first subparagraph, provided that equal conditions on timelines and accessibility are ensured.

Added“(7) ‘market participant’ means any person, including transmission system operators, distribution system operators, storage system operators and LNG system operators, who enters into transactions, including the placing of orders to trade, in one or more wholesale energy markets; ”;

RemovedIt is important to allow for the publication of inside information also through other channels, as it has happened so far, and to specify that this must be in addition to the publication through IIPs and not in substitution. It can be useful to have a backup in case of any technical problem with IIPs arise.