The concept for the "organised market place" (OMP) or "organised market" emerged as a key element of the REMIT (Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency) compliance system.
In practical terms there is no escape from establishing the exact meaning and coverage of this term. There are at least 6 important aspects where the determining whether given trading venue is classified as the "organised market place" within the REMIT sense will play a major role.
1. Differentiation between the non-standard and standard contracts
Standard contract under REMIT means a contract concerning a wholesale energy product admitted to trading at an organised market place, irrespective of whether or not the transaction actually takes place on that market place ("non-standard contract" means a contract concerning any wholesale energy product "that is not a standard contract").
2. Table 1 / Table 2 reporting format
Distinction between the non-standard and standard contracts, in turn, influences on the transactions and orders reporting formats (respectively: Table 2 or Table 1 of the Annex to the Commission Implementing Regulation No 1348/2014 on 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)).
3. Final customers contracts
Implications of the organised market's definition, as designed by REMIT, are broader than the above two elements.
Among major considerations in this regard is also the fact that all contracts traded at organised market places are reportable records of transactions of wholesale energy products and should be reported in line with Article 8 (1) of REMIT and with the rules defined in Commission Implementing Regulation (EU) No 1348/2014.
From this principle there are, practically, no exceptions, hence, even final customers' contracts traded at organised market places should be reported to the European energy regulator (the Agency for the Cooperation of Energy Regulators - ACER) - irrespective of the 600 GWh/year consumption threshold.
The mere implication of the above rule is the aforementioned final customers are required to register in the European register of energy market participants in line with Article 9(1) of REMIT.
4. Orders' reporting
Another significant point regarding the role of organised markets in the REMIT compliance is the scope of orders to trade reporting.
In terms of REMIT obligation with respect to of trade data, orders to trade have to be reported only:
(i) when the order was placed on an organised market place or
(ii) in connection with proceedings on primary explicit capacity allocation.
There were initially some ambiguities regarding this issue, but ACER in its Q&As on REMIT clarified this unequivocally.
ACER referred in that regard to Article 6 of Commission Implementing Regulation (EU) No 1348/2014, which defines the reporting of orders to trade explicitly in paragraph 1 (for wholesale energy products placed at organised market places) and paragraph 2 (for primary explicit capacity allocations placed at allocation platforms).
Beyond that, ACER underlines, there is no obligation to report orders to trade (see e.g. Article 6(3) of Commission Implementing Regulation (EU) No 1348/2014 for activities outside an organised market place).
Giving reasons to the above opinion ACER also pointed to Recital 5 of Commission Implementing Regulation (EU) No 1348/2014, which clarifies the importance of monitoring orders to trade for an effective market monitoring, but refers exclusively to those orders placed at organised markets.
The practical consideration is, to establish whether a given order to trade in the energy market is reportable under REMIT, in the first place there is a need to check if the order was placed on an organised market place in the REMIT sense.
5. Reporting burden
Organised market places are mandated with the reporting obligation for transactions executed thereon, which arrangement substantially relieves their members or participants from REMIT reporting duties.
In line with Article 6(1) of Commission Implementing Regulation (EU) No 1348/2014, the reporting of details of wholesale energy products executed at an organised market place should be carried out by the organised market place concerned, or through trade matching systems or trade reporting systems. The organised market place concerned has to offer a data reporting agreement if requested by market participants.
Nevertheless, there is no obligation for the organised market place itself to become a Registered Reporting Mechanism (an RRM).
ACER confirmed already that the organised market place can delegate the reporting of the data to a third-party (which has to be an RRM). In this case Article 11(2) of Commission Implementing Regulation (EU) No 1348/2014 applies.
However, in line with Article 6(1) of Commission Implementing Regulation (EU) No 1348/2014, the organised market place is allowed to delegate data reporting only to another organised market, a trade matching or a trade reporting mechanism.
In the Q&As on REMIT ACER also presented its view on the situation when the organised market place does not offer a data reporting agreement at the request of the market participant. According to ACER, if the OMP does not offer a data reporting agreement or is not registered as an RRM, and therefore cannot offer a data reporting agreement, the OMP will have to nominate a third party RRM and will have to fulfil its obligation to offer a data reporting agreement through the nominated third party RRM. The nominated third party RRM would offer a data reporting agreement to market participants on behalf of the OMP.
6. Reporting start date
Last but not least, pursuant to Article 6(1) of the said Commission Implementing Regulation No 1348/2014 the determination that the contract is "executed at an organised market place" prescribes the reporting start date 7 October 2015 and not, as for majority of other contracts, 7 April 2016.
After establishing the importance of the problem of the proper identification of OMPs the time comes up to refer to the respective definitions.
They are stipulated in Article 2(4) of the Commission Implementing Regulation 1348/2014.
Pursuant to the said provision, "organised market place" or "organised market" mean:
a) a multilateral system, which brings together or facilitates the bringing together of multiple third party buying and selling interests in wholesale energy products in a way that results in a contract,
b) any other system or facility in which multiple third-party buying and selling interests in wholesale energy products are able to interact in a way that results in a contract.
Hence, it is rather spacious category, inclusive, inter alia, of:
- other persons professionally arranging transactions (PPATs), as well as
The question may arise why already well established MiFID definitions are not expressly used in the legislation in this context (for the OMP delineation).
Such proposition was even submitted by market participants to the ACER, however, the regulatory stance was as follows:
“The proposal has not been accepted for the upcoming version of the TRUM Annex II, as it would induce a modification of the overall structure of the document that would require an additional consultation with all stakeholders.
Furthermore, please note that the differentiation between different types of OMPs arises from different legal consequences related to the data reporting applicable to OMPs (e.g. Article 7(3) of the REMIT Implementing Regulation).
In any case, there is flexibility for exchanges and brokers to use each other’s Annex II examples to undertake reporting” (see ACER Document of 30 April 2021 Outcome of the consultation of relevant parties on the Annex II to the TRUM v. 4.0 and v. 4.1).
Hence, it seems that the ACER’s position is not definitive and the approach regarding the MiFID’s terminology use in this regard may evolve over time.
ACER's understanding of the term "organised market place"
Pursuant to ACER, a broker, as a person or a firm that arranges transactions between a buyer and a seller for a commission when the deal is executed, is not necessarily an OMP.
Broker platforms do not automatically become OMPs, but it is only possible if they fulfil the OMP criteria stipulated in Article 2(4) of Commission Implementing Regulation (EU) No 1348/2014 (ACER's Frequently Asked Questions (FAQs) on REMIT transactions reporting (General questions, Question 1.1.3, as of 21 November 2015)).
The June 2020 edition of the ACER's Trade Reporting User Manual (TRUM) underlines one more important question, i.e. that brokers (that are organised market places rather than executing brokers) are not market participants and should not appear as a counterparty.
The said June 2020 edition of the TRUM elaborates in this regard on the difference between a broker as an OMP and executing broker as follows (p. 18):
"The Agency considers a broker a natural or legal person that arranges transactions between a buyer and a seller for a commission when the trade is executed. This is not necessarily an OMP. Broker platforms are mentioned as examples of OMPs, but this does not mean that all brokers automatically have to be considered OMPs. This will only be the case if they fulfil the OMP criteria stipulated in Article 2(4) of Commission Implementing Regulation (EU) No 1348/2014.
If a market participant places an order on an OMP through a broker (usually an executing broker) and this particular broker is the counterparty to the transaction, then the executing broker is a REMIT market participant and has reporting obligations for all its trades and orders to trade placed on the exchange, including those that the broker gives up.
An executing broker is a natural or legal person that executes transactions on an OMP on behalf of its clients. Since an executing broker places an order and executes it without bringing together “multiple third party” buying and selling side, the executing broker would not be considered an OMP.
In some circumstances, a broker (when considered a REMIT OMP) may offer the service of executing broker to their clients. The firm is providing two different services: one as OMP and one as executing broker. For the executing broker business the firm will be considered a REMIT market participant (please see Annex III to the TRUM available on the REMIT portal). This firm should register its executing broker business (and only that) as market participant with the relevant National Regulatory Authority.
Brokers (that are organised market places rather than executing brokers) are not market participants and should not appear as a counterparty."
Moreover, according to the TRUM, the notion of "multiple third party" plays a key role in determining what constitutes an OMP; a many-to-many trading possibility must exist in order to consider it an organised market place.
In the Agency's view, multilateral systems that procure or sell energy on behalf of TSOs only for balancing purposes should not be considered organised market places if those systems act solely on behalf of the TSOs.
Moreover, ACER considers such a system facilitates a one-to-many trading opportunity at each imbalance period, e.g. in an electricity market, per each half hour/hour balancing period the system procures or sells energy for the TSOs.
However, if the multilateral system brings together or facilitates the bringing together of "multiple third parties" procuring and selling energy, the system facilitates a many-to-many trading opportunity, e.g. if participants can trade with each other and the TSO in a within day gas market to adjust their positions, that system should be considered an organised market place.
Likewise, if the multilateral system brings together or facilitates the bringing together of "multiple third party" buying and selling of capacity, e.g. on a capacity secondary market, that system should be considered an organised market place if that system allows many-to-many trading.
List of Organised Market Places
The List of Organised Market Places has the form the electronic database established and mainained by the Agency for the Cooperation of Energy Regulators (the ACERs' List of Organised Market Places (REMIT Portal).
Article 3(2) of the REMIT Implementing Regulation
In order to facilitate reporting, the Agency shall draw up and publish a public list of organised market places upon entry into force of this regulation. The Agency shall update that list in a timely manner.
The legal base for establishing the List of Organised Market Places represents Article 3(2) of the above-mentioned Commission Implementing Regulation No 1348/2014.
Article 6(1) of the above Regulation prescribes the organised markets to be the reporting channels for transactions and orders in wholesale energy products.
The said provision stipulates:
"Market participants shall report details of wholesale energy products executed at organised market places including matched and unmatched orders to the ACER through the organised market place concerned, or through trade matching or trade reporting systems.
The organised market place where the wholesale energy product was executed or theorder was placed shall at the request of the market participant offer a data reporting agreement."
In the REMIT compliance system the periodically-updated List of Organised Market Places is intended, among others, to enable market participants and other stakeholders to identify such trading platforms as reporting channel for transaction reporting, including the reporting of orders to trade, in the process of data collection under Article 6(1) of the REMIT Implementing Regulation.
Market participants have to report details of wholesale energy products executed at organised market places, including matched and unmatched orders, to the ACER through the organised market places concerned, or through trade matching or trade reporting systems (RRMs).
According to the ACER’ presentation (2nd Energy Market Integrity and Transparency Forum, Ljubljana, 6 and 7 September 2018) there were 73 OMPs in the EU at the time of the document.
The ACER OMPs' list as visited on 1 September 2020 evidences 83 OMPs, mostly energy exchanges and broker platforms.
Procedure for OMP listing
The process for establishing the list of organised market places was preceded by public consultations.
REMIT Comitology Committee voted on the draft for the above REMIT Implementing Act on 3 October 2014.
As regards new entities the ACER has advised that the candidates should get in touch with the Agency well in advance before taking up business.
The steps to be taken by the new OMP in order to be listed in the Agency's list of OMPs are as follows:
- read through the information on ACER's REMIT portal;
- fill out the Agency's OMP registration form and provide at least one of the following codes which are relevant for transaction reporting: Legal Entity Identifier (LEI) code, Market Identifier Code (MIC);
- provide a list of standard contracts admitted to be traded on the OMP;
- provide a third party Registered Reporting Mechanism (RRM), which reports transactions on your behalf or apply to become an RRM yourself (ACER adds that the procedure to become an RRM takes at least three months, but can also take up to six months).
Interrelations between the List of Organised Market Places and the List of Standard Contracts
The List of Organised Market Places enables these platforms to submit identifying reference data for each wholesale energy product they admit to trading to the ACER in order to assist the Agency to comply with its obligation to draw up and maintain a public List of Standard Contracts in order to facilitate transaction reporting under REMIT, including the reporting of orders to trade.
The List of Standard Contracts will also serve as a tool for market participants and other stakeholders to understand which table of the above REMIT implementing acts' annex they will have to use for the reporting.
Commission Implementing Regulation No 1348/2014 on 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))