Article 4 of REMIT introduced the obligation to disclose inside information, including information relevant to facilities for production, storage, consumption or transmission of electricity or natural gas or related to the capacity and use of LNG facilities, including planned or unplanned unavailability of these facilities.
This means that information deemed as inside information must be made available to the public and they should include assets' information, but they may be not limited to these.
17 July 2019
- ACER publishes an updated version of the 4th Edition of its Guidance on the application of REMIT (in Sections 7.1 and 7.2 ACER introduces the new requirement for the information to be disclosed using an inside information platform or transparency platform)
16 July 2019
13 December 2018
30 May 2018
Disclosure obligation under Article 4 of REMIT should be distinguished from the reporting requirement in line with Article 8 thereof, which introduced:
- the obligation to provide the Agency for the Cooperation of Energy Regulators (ACER or "Agency") with a record of wholesale energy market transactions (Article 8(1)), including orders to trade ('transaction reporting'), and
- the obligation to report fundamental transparency information (Article 8(5)).
However it should be noted that the transaction reporting under Article 8(1) of REMIT is not subjected to public disclosure and the access thereto is retained only to national regulators and ACER.
Personal scope of application - market participants, parent and related undertakings and undertakings under control or operational responsibility
The obligation to disclose inside information lies with the market participant according to Article 2(7) of REMIT.
However, the disclosure obligation relates not only to inside information in respect of the market participant's own business or facilities, but also to inside information of the market participant's parent undertaking or related undertaking.
In addition, the disclosure obligation is not only related to inside information in respect of business or facilities which the market participant or the respective undertakings owns, but also in respect of inside information they control or for whose operational matters that market participant or undertaking is responsible, even in part only.
Article 4(3) of REMIT extends the disclosure obligation of Article 4(1) of REMIT to a person employed by, or acting on behalf of, a market participant receiving the inside information in the normal course of the exercise of their employment, profession or duties as referred to in Article 3(1)(b) of REMIT.
If so, that market participant or person shall ensure simultaneous, complete and effective disclosure of that information.
However, this provision does not apply if the person receiving the information has a duty of confidentiality, regardless of whether such duty derives from law, regulation, articles of association or contracts.
In the ACER's opinion, the limitation of this exception to Article 4(3) of REMIT is considered to mean, in contrary, that no such exception applies to market participants in relation to parent undertakings or related undertakings according to Article 4(1) of REMIT.
It is noteworthy, the need to develop and implement guidelines and procedures for publication of inside information under REMIT relates to all market participants, even though they do not have any physical assets (Nord Pool Consulting AS document of 15 August 2017 “REMIT Best Practice, A sector review on how to comply with REMIT related to inside information and market abuse“, p. 33).
Consequently, all market participants trading in the energy physical market should be prepared for publishing information to the market, which means being in the possession of relevant instructions or agreements, training and access to a UMM (Urgent Market Messages) reporting system in place.
Inside information disclosure thresholds
UK Ofgem communication of 11 July 2014 highlighted that under REMIT "there are no thresholds for the disclosure of inside information. Instead market participants' conduct will be assessed against the definition of insider information under REMIT Article 2(1)."
Acknowledging the fact of application of indicative thresholds by some market participants in their internal compliance processes, Ofgem (as well as ACER in its third edition of REMIT Guidance) refrained from publishing any thresholds.
The said application of indicative thresholds by market participants in their internal compliance processes seems to be the regulators' preferred option, as ACER referred in its Guidance to firms' market experience, but also, responsibility.
Also in the Document of 8 September 2015 Prohibition of market abuse under the Regulation on wholesale energy market integrity and transparency (EU) No 1227/2011 (REMIT) Ofgem reiterates that under REMIT there are no thresholds for the disclosure of inside information, but market participants' conduct consisting in using thresholds (for operational efficiency reasons) to determine whether to make a REMIT notification, will be assessed against the definition of inside information under REMIT Article 2(1).
Ofgem stresses, moreover, whether or not a piece of information is covered by this definition is likely to depend on market conditions at the relevant time.
ACER’s conclusions of the 2nd Energy Market Integrity and Transparency Forum (6 - 7 September 2018) acknowledged that threshold limits are difficult to harmonise due to the complexity and specificity of the markets, but that REMIT data could nonetheless be used to study possible threshold definitions based on the reported status of the energy market.
ACER’s public consultation of 17 July 2019 on definition of inside information (PC_2019_R_05) can be seen as a consequence of the above process.
The way the questions are formulated shows the inside information publication thresholds are still high on the ACER’s agenda. Here are some examples:
1. Please describe your assessment of whether an information is to be considered an inside information. Please describe the process step by step including the tools used and the participants involved.
2. Has the unavailable capacity concerned by an outage of a production unit been a criteria in your assessment of REMIT inside information? Please provide detailed reasoning including the methodology to set your threshold(s).
3. If so, which amounts do you consider to be relevant and would apply as a threshold? Do those amounts vary depending on the relevant market situation? If there were changes in your methodology, please provide information in this regard as well.
4. Do you apply any further thresholds for other kinds of inside information?
5. Which criteria do you apply for using inside information disclosed by other market participants for decisions to enter into a transaction relating to, or to issue an order to trade in a wholesale energy product? Please describe the decision making process in detail including the reasoning involved.
6. Do you distinguish between inside information relating to the electricity and gas markets, or do you apply one general threshold which covers both electricity and gas markets? If applying different thresholds, what do you base your decision on (key factors)?
7. Do you take into account and distinguish between geographical peculiarities or different markets or is your decision based on different amounts of capacity?
8. Are the thresholds that already exist within the framework of the transparency regulation a factor you take into consideration in your assessment of inside information?
Each REMIT publication of inside information mustn't include:
1) statements by company executives,
2) any form of advertisement,
3) any other irrelevant information,
4) disclaimers (ACER discourages the use of disclaimers, if disclaimers are used, they should be clearly separated from the main body),
5) excessively long content (it should be as short as reasonably possible and usually not exceed 10 to 20 lines).
The content of the REMIT publication pursuant to ACER guidance and implementing regulation
ACER's Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency made a recommendation on the information the REMIT publication should and mustn't contain (see boxes).
It is noteworthy, the ACER Guidance defines a minimum set of information required for publication, regardless of whether the information is published on a transparency platform or on the market participant's website.
The aforementioned Ofgem communication of 8 September 2015 recommends market participants should publish their notifications in such a way as to ensure they are easy to understand.
To this end, Ofgem encourages market participants to consider publishing an inside information "factsheet" to explain any part of their notification procedures/assumptions.
Ofgem observes, some market participants have already taken this approach. In the Ofgem's opinion this aids transparency as an integral part of REMIT.
The required content
Each REMIT publication of inside information should include:
- the caption "Publication according to Article 4(1) of REMIT / UMM – Urgent Market Message"
- a subject heading that summarises the main content of the publication
- the name and contact information of the market participant
- if applicable, the name and location of the respective asset
- if applicable, the balancing area or market area concerned
- the time and date of the relevant occurrence, including e.g. the (estimated) duration of outages
- the time and date of publication
- if applicable, the reasons for the unavailability of generation units, consumption units or parts of the electricity or gas grid
- if applicable, a history of prior publications regarding the same event, e.g. if a prognosis is updated or an unplanned outage becomes a planned outage.
As regards the collection of inside information by the ACER, Article 10(1) of the Commission Implementing Regulation No 1348/2014 of 17 December 2014on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency (OJ L 363, 18.12.2014, p. 121 - "REMIT Implementing Regulation") establishes further requirements in order to allow the Agency to efficiently collect inside information for market monitoring purposes.
Under Article 10(1) of the REMIT Implementing Regulation, market participants disclosing inside information on their websites, or service providers disclosing such information on market participants' behalf, must provide web feeds to ACER.
Moreover, in line with Article 10(2) of the REMIT Implementing Regulation, when reporting information on transactions and fundamental data, including the reporting of web-feeds on the disclosure of inside information, the market participant is required to identify itself or be identified by the third party reporting on its behalf using the ACER registration code, which the market participant received, or the unique market participant code that the market participant provided while registering in accordance with Article 9 of REMIT.
Common schema for REMIT publications
Another important step towards the standard setting in the area of REMIT mandatory transparency was ACER's Public Consultation Paper of 27 May 2015 (PC_2015_R_03) REMIT Common Schema for the Disclosure of Inside Information.
Impact on carbon permit prices
In the above Consultation Paper ACER recommended, REMIT publication schema should include, among others, the field "impact on carbon permit prices".
The European energy regulators's intention was to allow readers of the Urgent Market Message (UMM) to evaluate the impact of the event on carbon permit contracts.
ACER underlined, moreover, adding this field "is the first step for websites and platforms, to be able to disclose inside information according to the Market Abuse Regulation standards avoiding double publication of the same inside information".
The indication of likelihood of having significant effect on the price of emission allowances or actioned products based thereon had been proposed in the said Consultation Document as the optional information only.
This was, presumably, on account of practical difficulties in assessing carbon price impacts of particular events relating to electricity production assets. It is often argued carbon price tendencies are mainly driven by macroeconomic data as well as politics, and not by individual circumstances (see for example EURELECTRIC response to the ACER Consultation Document, June 2015).
The text of adopted Annex VII to the REMIT MoP on transaction data, fundamental data and inside information reporting (version of 30 September 2015) shows, however, that ACER at present decided not to include the field relating to carbon prices' impact in the REMIT inside information schema.
Moreover, ACER's annual report on its activities under REMIT in 2014 (p. 66) listed the "establishment of appropriate mechanisms to access emission allowances data" among the deprioritised ACER's activities/deliverables.
Another point recommended by ACER in the aforementioned Consultation Paper of 27 May 2015 for disclosure in the REMIT publication schema was "Decision Time".
ACER gave an example of the company's management board resolution on the production plan of a power plant for the year ahead that included maintenance periods.
ACER argued, the traders of the same asset owner should be aware of the maintenance periods at the time of publishing of the UMM together with the rest of the interested public.
According to this example, the management board decided on the maintenance plan on Date1 and the UMM was published later on Date2. The traders of the same company and the public would be informed on Date2, therefore the Decision Time (Date1) has to be publicly known on Date2.
Decision Time disclosure duties may, however, entail procedural complexities involved with identifying exact date for the relevant decision in the course of decision-taking processes within market participants' organisational structures, particularly within corporate groupings (the issue accentuated equally by the above EURELECTRIC Response).
However, as was the case with the carbon allowances' prices, Annex VII to the REMIT MoP on transaction data, fundamental data and inside information reporting has not included so far the field relating to the "Decision Time" in the REMIT inside information schema.
Annex VII to the MoP on data reporting
The aforementioned consultations effected in the adoption by the ACER on 30 September 2015 of the Annex VII to the REMIT Manual of Procedures on transaction data, fundamental data and inside information reporting (MoP on data reporting).
In order to define the web feed standard for the disclosure of inside information, ACER developed three different XML schemas accommodating all identified types of inside information.
This is structured as follows:
I. the schema "Unavailabilities of electricity facilities" should be used when market participants publish UMMs reporting planned or unplanned electricity unavailabilities of any size that are likely to significantly affect wholesale energy prices;
II. the schema "Unavailabilities of gas facilities" should be used when market participants publish UMMs reporting planned or unplanned gas unavailabilities of any size that are likely to significantly affect wholesale energy prices;
III. the schema "Other market information" should be used when market participants publish UMMs that do not fall under type I. or II. Typically these are events that are likely to significantly affect wholesale energy prices but are less structured and less frequent by nature than unavailabilities of facilities (for example: reporting corporate or market developments, commissioning a new power plant etc.).
For the detailed description of specific fields as mandated by Annex VII to the MoP see the attachment to this article.
The updated 3rd edition of ACER's REMIT Guidance states that market participants should ensure inside information is published as soon as possible, but at the latest within one hour if not otherwise specified in applicable rules and regulations.
The aforementioned Ofgem communication of 8 September 2015 echoes this position.
Additionally, Ofgem considers that disclosing inside information to other market participants, including affected stakeholders, prior to public disclosure may constitute a breach of REMIT Article 3(1)(b).
As Ofgem underlines, market participants should take account of REMIT Articles 3(1)(b) and (c) whenever considering sharing potential inside information or discussing products potentially affected by inside information.
The number of platforms for the disclosure of inside information is growing, nevertheless they are still not available in all EU Member States, which effects in that in some Member States market participants publish inside information only on their websites.
The regulatory stance regarding both of the above publication channels is as follows:
1. Transparency platforms
ACER in its guidelines expressed a clear preference for discharging an obligation to publish inside information under REMIT through transparency platforms (for instance operated by Transmission System Operators or energy exchanges), "if such platforms exist".
If a transparency platform is used which discloses inside information in a timely manner, ACER considers a simultaneous publication on the market participant's website not necessary.
The state of play is that the central platform is not available at European level at present, thus the creation of national platforms for the publication of inside information in compliance with art. 4 of REMIT is theoretically possible. There are also available transparency platforms established by energy exchanges e.g. Nord Pool Spot and EEX Transparency platform, mentioned in ACER guidelines.
In view of these developments and considering the existence of transparency platforms like Nord Pool Spot and EEX there may arise some ambiguities whether the publication of inside information on the market participant's own website is currently allowed in light of ACER guidelines.
However, the hypothetical thesis that ACER's regulatory measure like guidelines may force market participants from all EU Member States to publish their inside information through Nord Pool Spot or EEX transparency platforms does not appear reasonable.
This dilemma will, likely, loose, its sharpness over time as the number of transparency platforms increases continously (ACER's annual report on its activities under REMIT in 2014 (p. 52 and 55) observes the Agency is aware of eight platforms for the disclosure of inside information for electricity in various Member States of the Union and seven for gas, while ACER' List of Inside Information Platforms, as visited on 2 December 2015, lists, non-exhaustively, nine transparency platforms for electricity and eight transparency platforms for gas).
ACER’s preferences as regards inside information publication channels do not change over time, in the REMIT Quaterly, Issue No. 11 / Q4 2017 the Agency once more emphasised that “it is the Agency’s stated objective is to have all REMIT inside information disclosure happen via centralised platforms”.
The ACER’s Open letter of 30 May 2018 observed that:
- most market participants use their own websites for the disclosure of inside information,
- in many cases, these websites do not provide web feeds and therefore do not comply with legal requirements,
- less than 10% of all market participants use inside information platform.
Moreover, in the Open Letter of 30 May 2018 ACER informed that:
- the Agency doubts that the disclosure of inside information on the multitude of different company websites can be considered effective,
- the Agency considers the possibility of registering of transparency platforms and making the use of these platforms compulsory.
Article 4 REMIT
Obligation to publish inside information
1. Market participants shall publicly disclose in an effective and timely manner inside information which they possess in respect of business or facilities which the market participant concerned, or its parent undertaking or related undertaking, owns or controls or for whose operational matters that market participant or undertaking is responsible, either in whole or in part. Such disclosure shall include information relevant to the capacity and use of facilities for production, storage, consumption or transmission of electricity or natural gas or related to the capacity and use of LNG facilities, including planned or unplanned unavailability of these facilities.
2. A market participant may under its own responsibility exceptionally delay the public disclosure of inside information so as not to prejudice its legitimate interests provided that such omission is not likely to mislead the public and provided that the market participant is able to ensure the confidentiality of that information and does not make decisions relating to trading in wholesale energy products based upon that information. In such a situation the market participant shall without delay provide that information, together with a justifi cation for the delay of the public disclosure, to the Agency and the relevant national regulatory authority having regard to Article 8(5).
3. Whenever a market participant or a person employed by, or acting on behalf of, a market participant discloses inside information in relation to a wholesale energy product in the normal exercise of his employment, profession or duties as referred to in point (b) of Article 3(1), that market participant or person shall ensure simultaneous, complete and effective public disclosure of that information. In the event of a non- intentional disclosure the market participant shall ensure complete and effective public disclosure of the information as soon as possible following the non-intentional disclosure. This paragraph shall not apply if the person receiving the information has a duty of confidentiality, regardless of whether such duty derives from law, regulation, articles of association or a contract.
4. The publication of inside information, including in aggregated form, in accordance with Regulation (EC) No 714/2009 or (EC) No 715/2009, or guidelines and network codes adopted pursuant to those Regulations constitutes simultaneous, complete and effective public disclosure.
5. Where an exemption from the obligation to publish certain data has been granted to a transmission system operator, in accordance with Regulation (EC) No 714/2009 or (EC) No 715/2009, that operator is thereby also exempted from the obligation set out in paragraph 1 of this Article in respect of that data.
6. Paragraphs 1 and 2 are without prejudice to the obli gations of market participants under Directives 2009/72/EC and 2009/73/EC, and Regulations (EC) No 714/2009 and (EC) No 715/2009, including guidelines and network codes adopted pursuant to those Directives and Regulations, in particular regarding the timing and method of publication of information.
7. Paragraphs 1 and 2 are without prejudice to the right of market participants to delay the disclosure of sensitive information relating to the protection of critical infrastructure as provided for in point (d) of Article 2 of Council Directive 2008/114/EC of 8 December 2008 on the identification and designation of European critical infrastructures and the assessment of the need to improve their protection (1), if it is classified in their country.
2. Market participant's website
The publication of inside information on the market participant's own website has been allowed by ACER, under some conditions however.
The condition precedent pursuant to ACER guidelines thereunder market participant is allowed to publish inside information on its website is that the adequate transparency platforms do not yet exist.
If the said condition is not met, the publication of inside information on the market participant's own website may be effected simultaneously to a publication through a platform - thus as a additional publication channel.
Hence, market participants may disclose inside information on their own website either as a fall-back option or simultaneously to a disclosure of inside information through an inside information platform, however, regulatory guidelines appear to treat the publication of inside information on the market participant's own website as an interim measure, moreover, allowed only unless otherwise specified.
Other regulatory requirements for using market participant's website as a REMIT inside information publication channel cover the following elements:
a) format of the publication:
- facilitating the consolidation of the information with similar data from other sources;
b) fees for making inside information available - free of charge;
c) language of the publication: official language(s) of the relevant Member State and in English or in English only;
d) social media use: only as additional sources not replacing website publications.
3. Disclosure in CEREMP
It is important also to note that information on where the market participant’s inside information is published must be listed on the market participant’s record in the CEREMP.
4. Web feeds
Pursuant to the REMIT Implementing Regulation No 1348/2014, market participants disclosing inside information on their website or service providers disclosing such information on market participants' behalf are required to "provide web feeds to enable the ACER to collect these data efficiently" (Article 10).
In the REMIT Quaterly, Issue No. 11 / Q4 2017 ACER underlines the obligation to have a web feed when disclosing inside information is in force for all places of publication (including a company website) since January 2015 (exactly 7 January 2015 - see also answers to Questions 4.1.5 - 4.1.7 FAQs on REMIT fundamental data and inside information collection).
This obligation is also stressed in the ACER’s public letter of 30 May 2018.
The Agency started the collection of inside information web feeds on 1 January 2017 through inside information platforms that publish Urgent Market Messages (UMMs) on behalf of market participants.
On 13 December 2018 the ACER has published the Guidance on the implementation of web feeds for Inside Information Platforms (Version 2.0).
The document is targeted to inside information platforms that are currently listed on the REMIT Portal or those that intend to apply to be listed.
It includes technical guidance on how the inside information is to be collected and ACER expects IT staff involved in technical implementation of web feeds to be familiar with the document.
The said document does not apply to individual market participants.
The exact start date for collecting by the ACER of inside information web feeds from individual market participants’ websites is not known yet.
Referring to the issue (answer to the Question 4.1.5, FAQs on REMIT fundamental data and inside information collection) ACER said that “[t]he Agency will not be collecting web feeds from Market Participants’ websites until further notice.”
5. Responsibility for transparency platform delays or technical failures
On the occasion of explaining the role and mutual interrelations of transparency platforms and market participants' websites in fulfilling the obligation to publish inside information under REMIT, the European energy market regulator has also made an important clarification on the scope of market participants' responsibility for transparency platform delays or technical failures.
The two key facts were in the first place acknowledged: that market participants bear the ultimate responsibility for the disclosure of inside information, however, they do not have an influence on the operation of transparency platforms.
To account for the above circumstances, in the ACER's opinion market participants are not responsible for temporary technical problems of such platforms fulfilling the RIS requirements. The crucial determination made by regarding that occasion is that if the information was transmitted to the transparency platform in time, the market participant should not be charged for having breached the obligation to disclose inside information.
If technical problems persist market participants have to use other platforms or their own website instead.
The key reservation is however, that although delayed disclosure of inside information due to technical problems of transparency platforms does not imply a breach of the disclosure obligation, the market participant is not allowed to trade based on that information as long as it is not available to the market.
Archives of REMIT historic inside information
Historic inside information should remain available on the market participants' website if not remained available by the inside information platform for a period of at least 2 years.
This is to allow other market participants to learn best practice disclosure and to assess previous incidents of the same facilities.
However, it seems that when considering periods of preservation of archives of REMIT historic inside information the periods of prescription in civil and criminal matters should be also taken into account.
Given that REMIT framework involves potential criminal sanctions for breaches (imposed on national level), as well as civil liability, records of historic inside information published may in certain cases absolve the firm (or persons involved) from liability or represent an important proof of due diligence in REMIT observance.
Periods of prescription are, however, particularly in criminal matters, usually far longer than the aforementioned 2 years.
Acknowledging the wide variety of prescription periods, which depend not only on the type of the crime but also on the specific national legal framework, it seems rational to establish the longest period of prescription, which may potentially apply, and to adjust the periods of preservation of REMIT archives accordingly.
This seems to be the more cautious approach than using simple 2 years of preservation of REMIT archives.
Article 4(2) of REMIT provides for an exemption from the obligation to timely publish inside information in a number of specified cases.
REMIT Article 4(2)
A market participant may under its own responsibility exceptionally delay the public disclosure of inside information so as not to prejudice its legitimate interests provided that such omission is not likely to mislead the public and provided that the market participant is able to ensure the confidentiality of that information and does not make decisions relating to trading in wholesale energy products based upon that information. In such a situation the market participant shall without delay provide that information, together with a justification for the delay of the public disclosure, to the Agency and the relevant national regulatory authority having regard to Article 8(5).
Publication of inside information may be delayed by the market participant under the the fulfilment of the following, cumulative preconditions:
1. the delay the public disclosure of inside information may follow only exceptionally, hence it mustn't amount to a regular and common market practice of a market participant,
2. market participant must be able to indicate its concrete legitimate interests that would be prejudiced If the information was not delayed,
3. such omission must not be likely to mislead the public,
4. the market participant is able to ensure the confidentiality of that information,
5. market participant is not allowed to make decisions relating to trading in wholesale energy products based upon that information,
6. the relevant information should be reported to the ACER and the relevant national regulatory authority without delay and include justification (in order to assist in fulfilling these obligations ACER has developed standard format for notification of delayed information - see below),
7. the decision to delay publication is a market participant's own responsibility, thus in case of potential legal challenge market participant bears the burden to demonstrate that all the above conditions are met and is exposed to all the consequences if he fails to do so.
It is noteworthy that Article 3(4)(b) of REMIT provides also for an exemption from the prohibition to trade on inside information before it is published (details in that regard see here).
The relevant electronic form - Delayed Information Notification Platform - is available via the ACER's REMIT Portal and can be used by market participants to comply with their notification obligations according to Articles 4(2) and 3(4)(b) of REMIT towards both the ACER and National Regulatory Authorities (NRAs).
Pursuant to ACER's annual report on its activities in 2012 there were 1 058 notifications of delayed disclosure of inside information received in 2012 from across Europe.
In 2014, the Delayed Information Notification Platform received 354 notifications on Article 3(4)(b) of REMIT, and 281 notifications on Article 4(2) of REMIT (ACER's annual report on its activities under REMIT in 2014, p. 48).
Nord Pool Consulting AS document of 15 August 2017 “REMIT Best Practice, A sector review on how to comply with REMIT related to inside information and market abuse“ (p. 35) provides some examples of situations potentially qualifying for the delay.
This could be a situation where permanent shutdown of a production/consumption site is planned, and there is a need for a HR-process for affected employees.
Another example could be in a situation where safety must be given priority over publication.
However, it is reserved that the compliance of the above examples with REMIT has to be assessed on a case by case basis.
The above document, moreover, draws the attention to the following elements of the best practice regarding delayed information under REMIT:
1. there is the need to ensure that necessary processes and procedures are implemented in advance so that compliance can be ensured when it is decided that information should be delayed;
2. documentation must be made of who has access to the information when:
- drafting insider lists,
- ensuring confidentiality;
3. inform ACER and the relevant NRA(s) about the delayed publication - use the reporting solution on the ACER platform;
4. ensure that no information reaches trading personnel, or alternatively, stop trading.
Best practices on publishing inside information under REMIT
There exist some industry best standards as regards publishing inside information under REMIT. In particular they have been recommended in the Nord Pool Consulting AS document of 15 August 2017 “REMIT Best Practice, A sector review on how to comply with REMIT related to inside information and market abuse“ (p. 26, 34, 35, 2nd Edition updated on 15 January 2020).
The said document, when referring to the requirement imposed on market participant to identify what kind of information they might possess could constitute inside information, accentuates that market participants using operational thresholds ought to to differentiate between a threshold suitable to normal market conditions versus a strained market situation and power balance in which much lower amounts could affect market prices.
Moreover, each market participant should go through the specificities for its company to:
- identify all facilities (production/consumption/transmission) the market participant owns or is responsible for and specify in which situations inside information might occur,
- identify what kind of situations exist in general, not related to specific facilities, where inside information occurs or might occur (such as having access to customer orders),
- identify stress points/parts of the organisation that are vulnerable for information leaks – intentionally and non-intentionally,
- map information flow to identify any information that could contain or qualify (or potentially qualify) as inside information,
- identify in what kind of situations the market participant might receive inside information from other third parties.
In addition, a clear description of the process of identifying inside information and the point in time when it arise, should be implemented.
This should also include descriptions on how to handle cases where it is uncertain whether a specific set of information constitutes inside information or not.
To the said document advises, as a general principle, that the persons sitting closest to the information were made responsible for the publishing.
However, this should be weighed against the challenge of ensuring that they have the necessary insight and competence to be able to effectively fulfil the requirements for effective and timely publication pursuant to REMIT.
Market participants having many power plants often find it beneficial that inside information is published by the central dispatch centre as this allows for building a stronger competence amongst the persons responsible for publishing.
Large power plants may arrange the information to be published directly from the plant.
This may allow for faster publication and can also reduce the number of persons involved, and thereby the risk of market abuse.
The optimal solution may differ from market participant to market participant, and must be assessed on an individual basis.
It is also recommended to include in the internal guidelines or to have separate guidelines containing the following:
1. definitions of:
- places for the publication of inside information,
- the relevant tools,
- kinds of information published, possible templates (with the information required by the ACER Guidance as a minimum);
2. alternative procedures in case of any issues with the system used for publication;
3. measures to ensure that:
- inside information is published as soon as possible, and at the latest within one hour,
- messages at all times are up to date.
Rules for coordination among several market participants involved in the process
The aforementioned Nord Pool Consulting AS document of 15 August 2017 analyses, furthermore, the REMIT best practices for publication of inside information in situations where there are multiple market participants responsible (p. 36).
Such situations, in practice, occurs where:
- there are several owners of a production/consumption facility/company,
- when publication is outsourced to a third party,
- where the owner/operator are not the same legal party/entity,
- where the balancing responsibility has been allocated to another party.
The need to differentiate this specific case arises in the context of decision whether market participant bearing responsibility to publish the inside information, shoud:
- publish the information separately (having accepted the significant risk to end up with publication discrepancies), or
- coordinate the publication.
NordPool Consultiong in the above document of 15 August 2017 argues that the best practise in such situations is to coordinate the publication, typically by having one party publishing on behalf of all responsible parties.
Such an arrangement does not influence on the legal responsibility for the publishing of inside information (which can not be legally outsourced - regardless of how the agreement is constructed).
Where the publication of inside information is coordinated among several market participants the following elements of best practice need to be accentuated:
- the party who is publishing information on other market participant’s behalf must possess sufficient knowledge and skills and have access to the relevant information;
- the parties are recommended to enter into a written contract where rights and responsibilities of each party are clearly defined;
- explicit courses of actions and contact persons may also be described in the agreement.
- an agreement to outsource the task of publishing inside information should always include the right for the owner of the information to publish the information itself if they consider this necessary in fulfilling their obligations (this may be relevant for situations where the parties do not agree on whether a certain information shall be published or not);
- there is the need to monitor the information published and continuously assess potential changes in the procedures or the agreement;
- market participant publishing inside information on behalf of cooperating parties should be required to have internal controls and be obliged to make the documentation available in the event of a request from competent authorities.
The aforementioned ACER's annual report on its activities under REMIT in 2012 refers to:
1) one case related to both potential non effective disclosure of inside information according to Article 4(1) of REMIT and potential insider trading according to Article 3(1) of REMIT;
2) five cases related to potential non-effective disclosure of inside information according to Article 4(1) of REMIT.
The case referred to under point 1 above was brought to the Agency's attention through a notification from a competent national regulatory authority (NRA). Since the case potentially had cross-border impact, the Agency established and coordinated an investigatory group consisting of all concerned NRAs.
The competent NRA's review led to the conclusion that the relevant inside information was not disclosed in a timely manner and that the market participant therefore was in possession of inside information when carrying out trading activities at day-ahead and intraday markets.
The market participant may have applied the exemption in Article 3(4)(b) of REMIT, but since it did not comply with the reporting obligation of this exemption, the market participant was formally in breach of Article 3 of REMIT.
However, in the absence of sanctioning rules at national level and since no actual price effect of the trade could be concluded, the market participant was informed on how to improve its compliance with REMIT requirements and only a statement of breach was issued.
Among five additional cases related to potential non-effective disclosure of inside information according to Article 4(1) of REMIT the two were taken up either by the Agency or the relevant NRA because of notifications of delayed disclosure of inside information and the three were taken up by the Agency following stakeholder contacts.
In all these cases, the Agency worked with the concerned NRA which in turn contacted the concerned market participant. All cases were closed without a breach of REMIT being found.
ACER in its report also indicates, it was repeatedly contacted regarding insufficient information published on events generating inside information. This concerned inter alia Urgent Market Messages (UMM) from market participants on company websites.
In most cases, requests were considered as Q&As and not considered as cases.
However, when a request was considered as a case, the Agency reviewed the relevant UMMs and requested additional background information about the market participant's trading behaviour and potential price effects either from the NRA concerned or from a competent market surveillance team from an organised market place concerned if considered useful.
In most cases, the Agency found that the incident was not in conflict with REMIT. In the cases where the incident, indeed, was in conflict with REMIT, it had no effect on the market.
In the latter case, it was normally agreed with the competent NRA that it identifies the elements of compliance that should be improved by the market participant in order to better meet REMIT requirements in future and the review of the case at stake was closed without further action.
ACER concludes the above review of the enforcement cases with the opinion that it expects that the number of cases under review will grow in the following years, in particular following the start of systematic data collection on the basis of the implementing acts.
In turn, UK Ofgem communication of 11 July 2014 notes the following shortcomings with regard to wholesale markets participants inside information publications:
- there is significant variation in the type of capacity changes that market participants report; some include the 'normal' capacity, some state the change in capacity, some state the capacity during an event and some include a mixture of all three,
- there is a lack of start and, in particular, estimated end times and dates of an event, sometimes there are dates but no times,
- many websites do not include timestamps to show when information has been published or updated,
- many market participants are not maintaining a public record of historical inside information notifications or updates to those notifications.
The aforementioned ACER's annual report on its activities under REMIT in 2014 (p. 47) recalls, with respect to the disclosure of inside information duties, the case where the Agency was notified by an NRA about an investigation regarding a potential breach of Article 4 of REMIT.
A market participant was reporting unplanned unavailability of power plants inconsistently and in a way that was not compliant with the guidance established in the ACER Guidance on the application of REMIT.
Some IT requirements included in the guidance (RSS feeds, 2 year history) were disregarded, and some content requirements were missing: timestamp of the publication, history of the publications about the same event.
As the said ACER's report mentions the NRA questioned and interviewed the market participant and the market participant committed to implement the required improvements.
Another interesting enforcement practical example provided by the Ofgem related to de-rated capacity margins. It was reported that during specific periods between November 2015 and January 2016, National Grid Electricity Transmission plc’s (NGET) erroneously caused incorrect de-rated capacity margin calculations to be published through Elexon’s online platform, which resulted in false or misleading signals as to the supply of, demand for, or price of wholesale energy products being given to the market, contrary to Article 5 of REMIT, as defined under its Article 2(2)(b) (see Ofgem investigates National Grid Electricity Transmission plc under REMIT for publishing incorrect market information).
ACER's Q&As on REMIT [last update 16 June 2017]
There’s an outage of a gas-fired power plant. What is the market participant’s obligation?
According to Article 4 of REMIT it is the market participant‘s obligation to publish inside information. The market participant should make an assessment on price sensitivity for either market (electricity and gas). If the outage of the gas-fired power plant is considered inside information relevant for the electricity market and the gas market, the information should be published in both markets, i.e. as an outage of an electricity production unit and as an outage of a gas consumption unit. ACER’s Guidance (Chapter 7.2.2) and MoP on data reporting (ANNEX VII) include data fields for inside information reporting which may help the market participants decide which information should be published as part of an Urgent Market Message.
Do final customers need to include the name and location of an asset when publishing inside information notifications?
As the disclosure obligation according to Article 4(1) of REMIT falls on market participants, final customers should first asses if they qualify as market participants according to REMIT considering the threshold set in Article 2(5) of REMIT.
The market participants shall publish inside information pursuant to Article 4(1) of REMIT. Chapter 7.2.2 of the ACER Guidance on the application of REMIT (4th edition) describes the minimum quality requirements for effective disclosure of inside information that includes the disclosure of the name and location of the asset concerned.
However, Article 4(4) of REMIT stipulates that the publication of inside information, including in aggregated form, in accordance with Regulation (EC) No 714/2009 or (EC) No 715/2009, or guidelines and network codes adopted pursuant to those Regulations constitutes simultaneous, complete and effective public disclosure.
The Agency points out that although it acknowledges application of Article 4(4) of REMIT, i.e. publication of inside information in aggregated form, the final customer, as any other market participant in question, needs to ensure that it publishes inside information in line with the requirements specified in Regulation (EC) No 714/2009 or (EC) No 715/2009, in an effective and timely manner. Further detail on the concept of timely disclosure may be found in Section 7.3 of the ACER Guidance.
How can a market participant (Company A) fulfil its obligations under Article 4 of REMIT and comply with the prohibition under Article 3 of REMIT when:
(i) Company A holds an inside information relating to Company B’s facility (Company B is NOT a market participant);
(ii) Company A holds an inside information on the asset of another market participant (Company C). Company C does not consider the information to be inside information. However, Company A considers that this information meets the definition of inside information pursuant to Article 2(1) of REMIT, wherein the companies are not parent/related undertakings.
According to the 4th updated edition of the ACER Guidance on the application of REMIT (‘’ACER Guidance’’, p. 41): ‘’the obligation to disclose inside information does not apply to a person or a market participant who possesses inside information in respect of another market participant’s [or other entity’s] business or facilities, in so far as that owner of this inside information is not a parent or related undertaking. Notwithstanding this, persons holding information in such circumstances will need to consider their compliance with Article 3 and in particular whether they hold such information as one of the persons listed in Article 3(2).’’
Therefore, if the information qualifies as inside information, Company A will need to consider its compliance with Article 3 of REMIT (prohibition of insider trading). In particular, Company A could hold such inside information as one of the persons listed in Article 3(2) of REMIT (e.g. persons with access to the information through the exercise of their employment, profession or duties under Article 3(2)(c) of REMIT).
Regarding case i), provided that the inside information is not published by Company B (it is not a REMIT market participant with obligations under Article 4(1) of REMIT), Company A will not be allowed to trade using such inside information as this would cause a potential breach of Article 3 of REMIT (insider trading).
The Agency considers that Company A should also assess if it holds any other information concerning their own business or facilities that could qualify as inside information that should be published pursuant to Article 4(1) of REMIT. In addition, the Agency would consider as best practice that Company B provides Company A with all necessary information about its activities which affect or may affect Company A, through contractual arrangements between the two, e.g. via a specific agreement or clause in the contract existing between both companies. This should aim at facilitating Company A to publish inside information which is precise, in case Company B holds information that affects Company A’s activities.
Regarding case ii), the Agency considers that Company A should fulfil its obligations of publishing the part of the inside information which concerns its own business or facilities pursuant to Article 4(1) of REMIT. In addition, the Agency would consider as best practice if Companies A and C exchange between themselves all necessary information about their activities which affect or may affect the other company, through contractual arrangements between the two, e.g. via a specific agreement or clause in the contract existing between both companies. This should aim at facilitating both companies to publish inside information in case one company holds information that affects the other company’s activities.
Finally, please note that the Agency reserves the right to review the guidance on the disclosure of inside information in respect of another entity’s business or facility in the future.
Obligation to publish inside information under REMIT - regulatory chronicle
17 July 2019
- ACER publishes an updated version of the 4th Edition of its Guidance on the application of REMIT (in Sections 7.1 and 7.2 ACER introduces the new requirement for the information to be disclosed using an inside information platform or transparency platform)
16 July 2019
13 December 2018
30 May 2018
REMIT, Article 4
Annex VII to the ACER's REMIT Manual of Procedures on Transaction Data, Fundamental Data and Inside Information Reporting, Data Fields for Inside Information Reporting: pages 73-88