Energy Regulatory Office REMIT II regulation comes into force on 7 May - News -

An EU regulation of particular importance for the integrity and transparency of the wholesale energy market^[1] is coming into force in two weeks.

REMIT II introduces a number of changes to the rules protecting the wholesale energy market from manipulation and unauthorised use of inside information. It broadens the scope of entities and energy products covered by the above-mentioned legislation, expands the obligations of market participants and other parties, and expands the definition of market manipulation and inside information. The powers of the Agency for the Cooperation of Energy Regulators (ACER) are also being strengthened, as are those of national regulators.

REMIT II comes into force already on 7 May 2024.^[2]

Due to the broad scope of the amendment, the President of URE recommends that all wholesale energy market operators familiarise themselves with the new legislation, as well as with the ACER’s Open letter on the implications of the revision of Regulation (EU) No 1227/2011 on REMIT data reporting aspects and notification obligations.

In line with the priorities of the URE’s educational and information activities and guided by the need to reach the broadest possible audience with communication of crucial relevance for the market, the regulator has prepared a summary of the most significant changes introduced by the new regulation. These include specifically the following:

• Broadening the scope of application of REMIT II to include trading in wholesale energy products that are also financial instruments.
• Alignment of the definitions in REMIT II with those in financial market regulations such as MiFID II^[3] /MiFIR^[4] and MAR^[5], including:
  • expanded scope of the definition of inside information to include intermediate stages of protracted processes;
  • expanded scope of the definition of market manipulation to include behaviour relating to wholesale energy products which gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products.
• Indication that market manipulation may designate the conduct of a legal person, but also, in accordance with European Union or national law, of the natural persons who participate in the decision to carry out activities for the account of the legal person concerned.
• Expanding the scope of the definition of wholesale energy products to include:
  • electricity supply contracts that may lead to a delivery within the EU as a result of the operation of coupled day-ahead and intraday markets;
  • electricity derivatives that may lead to a delivery within the EU as a result of the operation of coupled day-ahead and intraday markets;
  • contracts for the storage of electricity or natural gas in the EU;
  • derivatives for the storage of electricity or natural gas in the EU.
• Explicit designation of distribution system operators, storage system operators and LNG system operators as market participants subject to the Regulation^[6].
• Introducing the definition of a person professionally arranging or executing transactions (PPAET), with a reservation set out in in Recital 18 of REMIT II that direct electronic access providers and shared order-book providers are also considered as persons professionally arranging transactions.
• Revision of the definition of an organised marketplace (OMP), previously contained in Implementing Regulation 1348/2014^[7], which, under REMIT II, 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.
• Introducing a definition of an LNG market participant as a natural or legal person that, irrespective of its registered office or place of residence, engages in LNG trading and supply.
• Clarification of the notion of unlawful use of inside information.
• Enlarged scope of disclosure obligations towards organised market platforms (OMPs).
• Introducing mandatory disclosure of inside information via inside information platforms (IIPs).
• Clarification of market participants’ information obligations to report LNG market data to ACER.
• Enlarging the scope of the obligations of market participants to provide data to ACER on transactions in wholesale energy markets so as to include information on their exposures, by product.
• Requirement on market participants based outside the EU who engage in transactions that are subject to reporting to ACER under REMIT II to appoint a representative in the Member State in which they operate and to register with the national regulatory authority of that Member State.
• Introducing an obligation to notify ACER and the national regulatory authority of the Member State where the market participant is registered under Article 9(1) of REMIT II that the market participant is engaged in algorithmic trading.
• Introducing an obligation to notify ACER and the national regulatory authority of the Member State where the market participant is registered under Article 9(1) of the REMIT II Regulation of the provision of direct electronic access to an organised trading facility.
• Expanding the scope of the obligations of persons professionally arranging transactions (PPATs) to include the notification of ACER and national regulators of suspected breaches of the obligation to publish inside information.
• Imposing obligations on persons professional executing transactions under Article 16 of MAR who also execute transactions in energy products that are not financial instruments, to notify ACER and national regulators of suspected any breaches of the prohibition of unlawful use of inside information, and the prohibition of market manipulation and breaches of the obligation to publish inside information.
• Expanding ACER’s powers with regard to, among other things:
  • conducting REMIT-related investigations of a cross-border nature (involving two or more EU member states) in cooperation with national regulators;
  • carrying out inspections at the premises and other facilities of market participants suspected of breaching REMIT;
  • calling on controlled entities to provide information;
  • imposing periodic fines on controlled entities for failure to provide information requested by ACER;
  • preparing an investigation report for NRAs containing ACER’s preliminary findings together with the evidence collected;
  • granting and withdrawal of permits for and supervision over inside information platforms (IIPs);
  • granting and withdrawal of permits for and supervision over registered reporting mechanisms (RRMs).
• Expanding the responsibilities of national regulatory authorities  with regard to supervision over the wholesale energy market, cooperation with ACER and other NRAs, financial regulators and the European Securities and Markets Authority (ESMA), competition authorities, tax authorities and EUROFISC^[8]as well as other institutions at national level.
• Harmonising, across all EU member states, the approach to administrative sanctions and measures for breaches of REMIT II, including an obligation to ensure that NRAs have the power to impose one or more of the administrative sanctions indicated in the Regulation or to apply one or more of the other administrative measures.

Information on REMIT and REMIT II is available on the URE website.

[1]Regulation (EU) 2024/1106 of the European Parliament and of the Council of 11 April 2024 amending Regulations (EU) No 1227/2011 and (EU) 2019/942 as regards improving the protection of the Union against manipulation on the wholesale energy market, which is known as REMIT II , published on 17 April 2024 in the Official Journal of the European Union.  REMIT II is the amendment of the EU Regulation on Wholesale Energy Market Integrity and Transparency (known as REMIT), as well as the Regulation establishing the European Union Agency for the Cooperation of Energy Regulators (ACER).
[2] With certain derogations as provided for in REMIT II.
[3] Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU; OJ L.2014.173.349.
[4] Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012, OJ L.173/84.
[5] Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC, OJ L.173/1.
[6] Liquefied natural gas
[7] Implementing Regulation (EU) No 1348/2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency; OJ.L.2014.363.121 of 18.12.2014.
[8] Network for the swift exchange, processing and analysis of targeted cross-border fraud information between Member States and for the coordination of any follow-up action to combat VAT fraud, established under Chapter X of Council Regulation (EU) No 904/2010 of 7 October 2010 on administrative cooperation and combating fraud in the field of value added tax; OJ L.2010.268.1 of 12.10.2010.