The call for reconsideration in that regard is further substantiated by the fact that the Commission’s observation on the alternatives in Member States for the level and type of regulation of power exchanges (i.e. (1) no regulation, (2) power exchanges operating under financial regulation, (3) power exchanges operating under energy regulation and (4) power exchanges operating under both regulations) contrasts to some extent with findings made by CEER (Council of European Energy Regulators) in its document ‘Final advice on the regulatory oversight of energy exchanges, A CEER Conclusions Paper’ (Ref: C10-WMS-13-03a) of 11 October 2011.


CEER in the first place distinguishes between spot and derivatives energy exchanges. Spot energy exchanges provide for day-ahead and intraday – or within-day – trading of electricity and/or gas products, whilst according to CEER ‘derivatives energy exchanges provide for the trading of futures and options relating to electricity and/or natural gas products as regulated markets or Multilateral Trading Facilities (MTFs) according to MiFID’.


CEER further elaborates that ‘Whilst the supervision of energy derivatives markets is harmonised at European level by MiFID, the supervision of energy spot markets differs from Member State to Member State.’


It also finds ‘In the absence of an EU sector-specific regulation, MiFID is currently the only legal framework for the supervision of energy derivatives exchanges at EU level. Under MiFID, organised markets are distinguished as regulated markets or multilateral trading facilities (MTFs) defined in Article 4 of MiFID. The definition applies to financial instruments in the form of commodity derivatives traded at regulated markets and MTFs, hence also to energy exchanges.’ and


‘Regulation within the MiFID regime depends on the traded products and only covers financial instruments. Therefore, derivative markets at energy exchanges or energy derivatives exchanges as such are normally supervised by national financial regulators.’


CEER concludes that ‘As spot energy trading venues are not covered by MiFID, there are no rules at European level obliging Member States to require inter alia a supervision of compliance with self-regulated rules of the market place or with other legal obligations. As long as spot energy markets are not an annex to a regulated market or MTF, such markets are considered as unregulated markets under MiFID. This is why some Member States, under their national rules, apply the MiFID rules particularly applicable for regulated markets mutatis mutandis also to spot markets. However, since these spot markets are not covered by MiFID, they cannot benefit from the MiFID passport-function for operations in other Member States.

For most energy exchanges, the question of separate supervision for spot and financial products is not applicable as no differentiation in the supervision between physical and financial markets exists in their domestic legislation.’ The EEX exchange is mentioned in the CEER document in the context of the last sentence.


There are the following ambiguities as regards the whole case:


1. Are there in any Member State any energy exchanges which do not qualify as regulated markets or MTF as defined by MiFID (for instance act under specific national legislation divergent from financial markets regulations)?


2. Do the energy exchanges referred to under point 1 trade in physically settled commodity (electricity) forwards?


3. Are transactions mentioned in points 1 and 2 captured by MiFID?


In my opinion the answer to the first and second question is in the affirmative and to the third question is in the negative.


If the above contentions are correct it will lead to the conclusion that the regulatory framework is not harmonised at European level – contrary to the CEER findings – not only as  regards spot electricity trading but also with respect to trades characterised in the above three points.


Given the current hardship with the similar situation of the absence of important legal mechanisms that were desisted from when the uniform EURO currency had been introduced, it may be a good time now at least to reconsider in the market coupling process the issue of uniform regulatory framework for energy exchanges.