The impact of the new regulatory measure is estimated (assuming the threshold of 6 million tonnes a year) that 70 companies would be captured by the requirement to disclose inside information on the carbon market (approximately 56% being energy producer and the rest other industrial emitters) accounting for 70% of the total verified emissions, and 857 companies would be exempted.


The criterion for a differentiation of those 70 companies pursuant to draft implementing acts to the new Market Abuse Regulation (MAR) is:

a) carbon dioxide (CO2) equivalent of 6 million tonnes a year;

b) rated thermal input of 1,050 MW

(per company).


Several years ago it was debatable, whether it is functional to create entirely new, self-standing legal framework for a new type of the tradable right like an emission allowance, to protect the participants from the fraud and market abuse.


EU ETS was at that time heavily impacted by the VAT carousel fraud, emission allowances were stolen from Member States' registry accounts (which involved EU ETS participants into burdensome procedures before the courts), in other words, emissions trading legal architecture proved to be vulnerable.


Decision made at that time was to use financial market safeguards to enhance emission trading infrastructure, which was effected by classifying emission allowances as financial instruments under MiFID II Directive.


Today we experience the consequent follow-ups to the above fundamental policy choices.


The new Market Abuse Regulation (MAR, accompanied by the Market Abuse Directive – MAD II), besides its traditional scope relating to issuers of financial instruments, has also swept to carbon units. There was, however, a major problem, how to implement inside information issues onto EUETS-relevant areas, since there are not entities like "issuers" of financial instruments for carbon units (the government bodies can hardly be recognised as such).


The problem has been resolved by establishing a threshold, emitters above which are considered significant enough to be treated analogously to the "issuers" of financial instruments. The effect is price-sensitive information for EU ETS is possessed by circa 70 companies, both, electricity generators and industrials, and these unlucky ones are burdened with new responsibilities, procedures and regulatory risks.


Partly, they are already coping with similar and overlapping REMIT Regulation framework, thus MAR impact should not be considered devastating. However, nuances, as always, exist, it is noteworthy for instance, that as opposite to REMIT, the use of market participant's own website cannot be considered proper public disclosure under MAR.


I think, such an unsophisticated electricity producer may feel quite hemmed by, quite invasive, the new language consisting of strangely voiced words like MiFID II, MiFIR, EMIR, REMIT, MAR, MAD II... Inside information disclosure, restrictions on managers transactions and many, many other... To establish what the new obligations are it is necessary to go through (with implementing acts) several thousand pages and still new are flowing. Is there anybody, who has read all this?


And there are obviously criminal sanctions for those not complying (for natural as well as legal persons) - so the acronym for the relevant directive - MAD - seems particularly relevant.




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