Eye on the Markets October 2015: REMIT Transaction Reporting
REMIT covers trading in wholesale gas and power in the EU (wholesale energy products) as well as related transportation contracts and derivatives. Transaction reporting is one of the final REMIT requirements to be implemented
Reporting for standard contracts in relation to the supply of electricity or natural gas started on 7 October 2015, with delivery in the EU and derivatives relating to electricity or natural gas produced, traded or delivered in the EU, in each case executed at an Organised Market Place (OMP), including matched and unmatched orders (Phase 1 Reporting Obligation). All other trades are reportable from 7 April 2016 (Phase 2 Reporting Obligation). Pre-existing trades that are still outstanding on the relevant start date are reportable within 90 days (Backloading).
Market participants (MPs) are required to register with a national regulatory authority (NRA) before they enter into reportable trades.
REMIT and the Implementing Regulation prescribe specific reporting channels through which trades must be reported to ACER’s database, ARIS. Transactions subject to the Phase 1 Reporting Obligation must be reported through the OMP concerned (or through trade matching or trade reporting systems). The OMP is required to offer a data reporting agreement at the request of the MP (although no specific terms are prescribed). ACER has stated that an OMP is not under an obligation to offer Backloading. In practice, if they are technically capable of doing so, many OMPs are taking the commercial decision to offer it. MPs should check this with their OMP brokers and exchanges. OMPs must report to ACER through a registered reporting mechanism (RRM). There is no requirement for the RRM to be a party to the data reporting agreement offered by the OMP (although some are offering tripartite agreements where the relevant RRM agrees to this).
The Implementing Regulation provides that where a person reports through a third party, it will not be responsible for failures to report that are attributable to failures of the third party. It does, however, remain under an obligation to take “reasonable steps to verify the completeness, accuracy and timeliness” of that reported data . There was previously no guidance on what ACER regards as reasonable steps. What MPs can reasonably do now depends on the access they have to data reported to ACER on their behalf through an RRM. If the RRM is not a party to the OMP’s data reporting agreement, MPs need to ensure this point is covered in a bilateral agreement between them and the relevant RRM. This continues to be one of the main areas of focus and concern when putting in place documentation and operational processes to comply with the Phase 1 Reporting Obligation.
Differing approaches to documentation, different technology solutions and the large number of OMPs and RRMs involved represent a significant challenge for all.