REMIT carve-out removed from the regulatory agenda
- Category: REMIT
I have read recently one of multiple ESMA’s reports, and, I must say, it is pretty interesting to see how entirely subjective some important things are.
Consider REMIT carve-out: ESMA says it should be extinguished, it is bad, it flaws competition and a level-playing field between trading venues, etc.
Regulated markets - according to the ESMA - are the main victims because the electricity and gas products have been redirected to OTFs.
What’s funny, the same regulated markets say what an idea, they are happy with the REMIT carve-out.
European Commission triggers multilateral single-dealer venues trading in financial instruments
- Category: MiFID
European Commission in the public consultation launched on 17 February 2020 on the review of the MiFID II and MiFIR framework argues the multilateral single-dealer systems trading in financial instruments offer very similar functionality to a multilateral system, hence MiFID II/MiFIR should encompass these systems to ensure fair treatment for market players.
Combined with the cancellation of the REMIT carve-out (recent ESMA’s intention), it can diametrically change the regulatory landscape for a physically-delivered energy contracts.
Capacity withholding - contentious issue
- Category: REMIT
Capacity withholding can sometimes be qualified as manipulative practice to artificially cause prices to be at a level not justified by market forces of supply and demand (including actual availability of production, storage or transportation capacity).
The precise delineation in this regard seems to be somewhat vague.
It is not a desirable situation from the perspective of legal certainty issues.
The recent ACER’s clarifications (Guidance on the application of REMIT (4th edition, updated on 15 October 2019, pkt 6.4.1 (i), p. 38, 39), although helpful, do not make the issue entirely comprehensive.
The ACER itself declares that the Agency “is committed to provide further clarifying guidance with respect to justifications mentioned in Section 6.4.1.(i)”.
Majority dictatorship among energy regulators
- Category: Energy market
I'm quite surprised by the remark of Alberto Pototschnig, the ACER’s Director, made in the foreword to Consolidated Annual Activity Report for Year 2018 of the Agency for the Cooperation of Energy Regulators (14 June 2019, p. 18).
I have never expected such words from the head of the European Agency.
What exactly was said, then? Here you have a citation:
“With the growing number of complex and contentious decisions taken by the Agency, the number of appeals has also increased. The need to defend its decisions in front of the Board of Appeal or the General Court, or to defend the rulings of the Board of Appeal in front of the General Court, put additional strain on the Agency’s resources, especially considering that the appellants typically use law firms to litigate their cases, while the Agency cannot afford such support. However, it is undisputable that the possibility of judicial or quasi-judicial review of regulatory decision is an essential part of modern and proper regulation. The issue is rather again one of resources on the Agency’s side. However, what I find regrettable is that some of these appeals have been lodged by national regulatory authorities which had participated in forming the Agency’s decision. In fact, all the decisions appealed so far were adopted following a favourable opinion of the Board of Regulators, which is based on a large (two-third) majority of its members, who represent national regulators. Therefore, while the legal right of all those affected, including national regulatory authorities, to appeal an Agency’s decision is, again, undisputable, the very governance of the Agency, with the key role of national regulatory authorities in the decision-making process, might suggest that national regulatory authorities should accept the democratic deliberation process in the Board of Regulators, even when they dissent from it, and do not seek to overturn the Agency’s decision, to which the Board of Regulators has contributed, by resorting to the judicial review”.
To make a long story short: I strongly disagree with you Mr Pototschnig in this part of your statement:
“national regulatory authorities should accept the democratic deliberation process in the Board of Regulators, even when they dissent from it, and do not seek to overturn the Agency’s decision, to which the Board of Regulators has contributed, by resorting to the judicial review”.
Why? Because decisions not only need to be made by a majority of votes cast, it would be much better if they were also reasonable and just and if they are the ACER should not be afraid of the judicial review.
And, further, since the minority should not be bullied by others.
Is there any further need to deliberate this issue? I do not think so.
Meaningless trading phases of the EU ETS
- Category: Emissions trading
No guarantee is given that the operation of the EU ETS, as originally established (the supply of emission allowances including), will remain unchanged or can be modified only at the end of a trading period.
MiFID II not working as expected
- Category: MiFID
CTPs, APAs, tick-size regimes: something went wrong...
MiFID II ancillary activities tests once more - legislators and supervisors uncertain how to apply new rules
- Category: MiFID
The MiFID II ancillary activities tests must be calculated for each separate person who trades in commodity derivatives within a group, said the European Commission on 31 May 2018.
Is it good or bad, someone may ask. It depends, lawyers usually answer.
Major reform of the European energy market approaches at a fast pace
- Category: Energy market
Although in April the focus is on the GDPR, the Electricity Directive also deserves some attention.
Commissioner Arias Cañete saved electric cars
- Category: Energy market
Charge point operators supplying electric vehicles with a charging service are final customers and do not require registration as Distribution System Operators (DSOs).
Trade-supporting IT tools subject to a MiFID audit
- Category: MiFID
It is time now for traders to take a closer look at an IT infrastructure used to support trading decisions. What for? Do you think that you have nothing common with the algorithmic trading technique? You may be wrong...
Transfer of positions between hedging and speculative portfolios under the MiFID II and EMIR OTC derivatives reporting frameworks
- Category: MiFID
Internal policies must “define a priori“ the types of OTC derivative contracts included in the hedging portfolios.
Is it possible, then, to change the portfolios allocation after the trade was reported under EMIR and MiFID II?
Positive answer to this question may add some value to OTC derivatives trading strategies.
Systematic internaliser’s transparency - complicated puzzle
- Category: MiFID
It is difficult to capture all legal requirements with respect to transparency of the systematic internaliser’s quotes and transactions at a glance.
Firstly, the pre-trade and post-trade issues must be differentiated.
Another layer of complexity is introduced by distinct legal frameworks regulating systematic internaliser’s transparency for:
- bonds, structured finance products, emission allowances and derivatives, on the one hand, and
- shares, depositary receipts, ETFs, certificates and other similar financial instruments, on the other.
If to concentrate on products like bonds, structured finance products, emission allowances and derivatives firstly, it occurs that to determine transparency obligations we must separately analyse not only clients of the systematic internaliser and other market participants but also different categories of clients of the same systematic internaliser.
Liquid and illiquid markets have their specificities too.
To decode the respective requirements the diagram recently revealed by the ESMA is much helpful.