|World of thresholds|
|Tuesday, 19 April 2016 21:05|
Every self-respecting EU legislative act must possess its own numerical thresholds, each of them of critical importance.
In order not to be monotonous, let's mention only few of them: MiFID II ancillary exemption threshold, EMIR collateral threshold, clearing threshold.
In this context it should not surprise anybody, the new Market Abuse Regulation (MAR) also operates with this technique, and what is particularly interesting for this website, MAR thresholds influence heavily emissions market.
MAR thresholds relate to carbon dioxide equivalent (6 million tonne a year) as well as rated thermal input (2,430 MW).
Entities with physical operations under the EU ETS that find themselves so unlucky to exceed any of these metrics, will have to publish information about their emissions, as listed companies must do in relation to information that may influence the equity value.
However, while the scope of inside information to be published by listed companies is rather concrete and operational for years already, practical examples of inside information on emissions market are to be invented yet.
But who must be this extreme innovator? Companies, obviously. And, if they fail to do this well, they will be subject to severe financial sanctions.
But where to find knowledge what events influence the price of carbon? The unexpected outage of 800 MW coal-fired power plant for two weeks? For one week? And what for 400 MW power plant? There is no other answer from the EU financial regulator (ESMA) up to now that companies must build the internal expertise in that regard.
This appears to become a common tendency among EU market regulators as ACER, after initial hesitation, also refrained from designating capacity thresholds applying for inside information disclosure for REMIT purposes.
ACER also concluded that market participants must be the ones, who should possess the necessary experience and skills to know what significantly influences the price of electricity and natural gas, and which events are negligible in that regard (in earlier Guidance ACER proposed the threshold of 100 MW power plant outage to define inside information in the electricity market, but the conception for specifying any numbers has been later abandoned by ACER).
All in all, thresholds occur extremely sensitive sometimes, no one (regulators including) is willing to take responsibility for specifying the concrete value.
Legal certainty, it appears, does not matter. The jurisprudence and courts will have to play the role, presumably.
The world of thresholds will become a reality