Is it formally correct to conclude a contract in the wholesale energy market with the counterparty that has not registered in the European Registry of Energy Market Participants and, consequently, does not have the ACER Registration Code?
Save for complex considerations regarding final customers below the 600 GWh, when it comes to professional trading in the wholesale energy market, there are ambiguities in that regard.
REMIT Implementing Regulation No 1348/2014 in Article 10(2) stipulates that market participant reporting information on transactions and orders subject to REMIT (including inside information), must be identified with the use of the ACER registration code, which the market participant received or the unique market participant code which the market participant provided while registering under REMIT.
Although some counterparties and organised market places (OMPs) require from their counterpartpies the ACER code at the inception of the trading relationship, ACER iself seems to be, at least at this juncture, unconvinced (see Functioning and Usefulness of the European Register of Market Participants, ACER's Public Consultation Paper PC_2016_R_01, 18 March 2016, p. 10).
The said Ljubljana-based European Agency currently only invites stakeholders to present pros and cons regarding the possibility for the introduction of such legal requirement.
It is noteworthy, ACER itself in its reporting manuals envisions situations where a REMIT market participant enters into a reportable bilateral transaction (e.g. a financial swap related to gas delivered in the EU) with a non-REMIT market participant (for example a firm that only trades OTC bilateral financial products related to the EU gas or electricity and never enters into a physical trade).
The specific, fictious ACER code has been even established to be populated in the REMIT transaction report (field 4) on this occasion - ACERNONMP.EU - to indicate that the counterparty to the trade is not a REMIT market participant.
It follows, moreover, from the recent update of the ACER's Frequently Asked Questions (FAQs) on REMIT transactions reporting that if market participant designated with the trade report with "ACERNONMP.EU" subsequently registers with the European Registry of Energy Market Participants and informs the counterparty of its ACER code (or any other reportable code) there is a requirement to send a modification report to update the code in previous reports.
Hence, there may be specific factual circumstances where the absence of the CEREMP registration may be assessed as legitimate.
But, equally, there may be ones, where it is not.
In any case, if your trading partner can't show to you its ACER code, such a fact should rise caution. The reasons for the absence of registration need to be discussed and explained, and the credibility of your counterparty needs to be additionally verified.
The company should also scrutiny whether the trading name of its counterparty (assigned to the counterparty's ACER code) is consistently used in the firm's internal records, in particular for the trading, settlement and accounting purposes.
Another point of interest would be the legal effects of such a new framwework. Would the consequences of the REMIT registration be analogous to the MiFID Europe-wide passport for investment firms? It would require legislative changes.
This conception was already raised in 2011 (Europe-wide passport for wholesale trading in electricity and gas – still fragmentary perception of the production chain), however, without a procedural continuation so far.