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?



Market coupling is a method for integrating electricity markets in different areas. With market coupling the daily cross-border transmission capacity between the various areas is not explicitly auctioned among the market parties, but is implicitly made available via energy transactions on the electricity exchanges on either side of the border (hence the term implicit auction). This means that the buyers and sellers on an electricity exchange benefit automatically from cross-border exchanges without the need to explicitly acquire the corresponding transmission capacity.


Power exchanges with high probability will play a crucial role in the imminent process for market coupling of EU electricity markets. The commonly known fact is that the time-table has been set in the meeting of EU Heads of States in February 2011 with 2014 as a target date for a fully functioning EU electricity market.


As explained in European Commission’s document ‘Public consultation on the governance framework for the European day-ahead market coupling’ of 28 November 2011 market coupling is the method chosen to integrate European wholesale electricity markets and it is the key element in the target model for capacity allocation and congestion management.


As the said document further elaborates, market coupling means that the cross-border flows at the day-ahead stage are determined by using the price signals in the day-ahead spot markets in each Member State. This enables an efficient European wide price formation mechanism and optimised use of the transmission grid through a strong interaction between price zones.


The issue is currently ‘hot topic’ with the draft Network Code on Capacity Allocation & Congestion Management (CACM) of 28 March 2012 just released by ENTSO-E for consultation. But the most interesting to me, when it comes to legal issues involved at the very basis of the whole process, are the two pieces of information mentioned in the said

European Commission’s document of 28 November 2011.


The first is, as the European Commission observed, that ‘Level and type of regulation of power exchanges is different depending on the Member State. The alternatives are (i) no regulation, (ii) power exchanges operating under financial regulation, (iii) power exchanges operating under energy regulation and (iv) power exchanges operating under both regulations.’


Considering the very advanced process for harmonisation of legal framework for European financial markets (with MiFID and MAD directives especially, draft EMIR recently) as well as the electricity ones (the third Energy Package, the Climate Package, REMIT Regulation), the above observation made by the European Commission is quite surprising and induces to pose a question, whether such important elements of the future uniform European electricity markets like energy exchanges shouldn’t be uniformly regulated at European level, at least with respect to some fundamental features (vide the choice between the financial and energy regulation).


For me the answer is rather obvious and is in the affirmative.