MiFID own account exemption modified - but something missing
- Category: Financial Market
European Commission Proposal of 25 November 2021 for a MiFID II amendment removes the licensing requirement for persons dealing on own account on a trading venue by means of direct electronic access (DEA) to the extent that they do not provide or perform any other investment services.
Article 1(2) of the European Commission Proposal of 25 November 2021 for a Directive of the European Parliament and of the Council amending Directive 2014/65/EU on markets in financial instruments (COM(2021) 726 final) modifies Article 2(1), point (d), point (ii) of MiFID II by deleting any references to the DEA.
Balancing energy price limit temporarily at 15,000 €/MWh
- Category: Energy market
The importance of balancing energy in the overall electricity market follows from the fact that it is required to ensure electricity system stability under the penalty of the blackout - if it is not available on a sufficiently firm basis.
What should be its price then? Some say that even greater than the VoLL, simply because of obvious collateral damages of the blackout.
Existing technical price limit (99,999 €/MWh) seems to be quite high and the ACER considers it is “sufficiently high”.
Nevertheless, it is transitionally lowered (see ACER Decision No 03/2022 of 25 February 2022 on the amendment to the methodology for pricing balancing energy and cross-zonal capacity used for the exchange of balancing energy or operating the imbalance netting process).
But the word: "limit" is not involved with any restrictions as when it is approached, its value is heightened. So, the sky is the limit?
Partial clearing of the day-ahead electricity market - settlement of FTR Options
- Category: Energy market
The evolution from the physical transmission rights (PTRs) to financial transmission rights (FTRs) in the form of options becomes a dominant feature the European cross-border electricity market.
This inevitably creates opportunities and further supports new forms and models of electricity trading, nevertheless, gives rise to new risks, which market participant must mitigate on its own.
Among these risks is the one involving potential partial clearing of the day-ahead market.
In such case the holders of FTR Options would be compensated in at the day-ahead market spread, which is the difference between the day-ahead price of the neighbouring bidding zone and the day-ahead price of the not cleared bidding zone (currently capped at 3,000€/MWh), while being exposed to the imbalance settlement price in that zone, which can be capped at a price higher than 3,000€/MWh.
Remuneration cap on LTTRs unacceptable to the European energy regulator
- Category: Energy market
ACER refuses to approve the TSOs’ proposal proposal for amendment of the harmonised allocation rules for long-term transmission rights and concludes that:
- an introduction of a cap for LTTRs remuneration is not an appropriate solution to address the malfunctioning of shadow auctions (it is suggested to improve communication with the market participants and to train them more for being ready for such events);
- the remuneration of LTTRs should be equal to the market spread to foster the efficiency of the LTTRs themselves;
- the hedging opportunities for market participants should be provided in full scope and should not be limited by a potential application of a cap.
From the perspective of a uniform, cross-zonal European electricity market it seems to be the right decision.
How to start energy trading in the EU
- Category: Energy market
Current EU's energy markets highs and lows may attract investors around the globe. Some may already ponder necessary first steps to start electricity trading in the EU.
Technically, every market actor intending to enter into transactions or place orders to trade in European Union’s wholesale energy markets (including those established or resident outside the EU) need to be registered with the European Register of Market Participants (CEREMP) and get the ACER Code.
Fit for 55 - impact on PPAs
- Category: Energy market
Power Purchase Agreements (PPAs) are a complementary route to the market of renewable power generation - in addition to support schemes or to selling directly on the wholesale electricity market.
Fit for 55 Package will introduce frameworks to facilitate the uptake of PPAs. RED II draft amendment also promotes the use of credit guarantees to reduce these agreements’ financial risks. Such agreements will be strictly evidenced as National Energy and Climate Plans will indicate the volume of renewable power generation supported by renewables power purchase agreements.
Given the estimate that only 14% of industry PPAs’ demand is bankable it seems that RED II draft amendments on credit guarantees could really help to develop this market segment.