Takeaways from the REMIT Forum

This is the fourth and conclusive installment of the Topic of the Month on REMIT

The REMIT Forum is a yearly event bringing together ACER and its stakeholders to discuss the implementation and potential evolution of REMIT. Traditionally it addresses topics such as transaction reporting, data quality, and market surveillance.  It is organised by ACER and is held online.

The seventh edition of the Forum, held on 5 December 2023,  focused primarily on the proposed revision of the REMIT regulation. That proposal will expand the scope of REMIT and enlarge the scope of REMIT’s market abuse provisions to wholesale energy products that are also financial instruments. This calls for reinforced cooperation between energy and financial regulators (ACER and the European Securities and Markets Authority (ESMA)), to ensure a robust regulatory framework for derivative wholesale energy products. An enhanced role for ACER in complex cross-border cases with a European dimension, reinforcing market integrity is also foreseen. 

As one of its main themes, the 7th Forum discussed the future of regulatory co-operation. It drew on a series of institutional, market and academic contributions presented throughout the session through a series of panels and discussions and covering almost the entire day.

A general takeaway from the event was that there was broad agreement on the need for a formalised cooperative role between ACER and ESMA to coordinate and facilitate the investigative and enforcement tasks of the different regulators. The Forum concluded that ACER and NRAs should further deepen their cooperation and the cooperation with other authorities including ESMA, financial authorities and competition authorities, especially for investigations related to cross- border cases.

A second main takeaway was that the Forum urged that REMIT II should not be overly prescriptive. It should allow for flexibility to account for the dynamic nature of EU wholesale energy markets.

That this process of enhanced co-operation may not always be straightforward and may involve new regulatory challenges was also signaled at the Forum. For example, for REMIT the competent Authority is identified based on the market in which the energy product is “referred to” but in financial Regulation the competent Authority is identified based on the market platform in which the product is traded.  The Forum also recalled under the new Regulation ACER will acquiring stronger powers than the ones currently granted to ESMA. This may also complicate the adoption of fully harmonized practices. Finally given the considerable resources involved for NRAs to co-operate on cross border cases, this may lead to a de facto de-prioritization of national cases.  That might not be an optimal outcome for national markets.

A further theme that was explored at the Forum was access to REMIT data for purposes other than market surveillance. REMIT data are most complete source on EU wholesale power and gas markets.  There are many ways that it could be leveraged, more specifically to allow academic analysis. The Forum offered an opportunity to consider appropriate and smart changes to this data and to increase the usefulness of REMIT information to all relevant parties. If confidentiality issues could be adequately dealt with,  then increasing market transparency of REMIT data should further deter market abuse.

 

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