2023/0076/COD: Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 1227/2011 and (EU) 2019/942 to improve the Union’s protection against market manipulation in the wholesale energy market

Following the recent announcement of a reform to the EU’s electricity market design by the EU Commission in an effort to dampen short term price fluctuations, foster investments in renewable energy sources, and enhance market oversight, a first new proposed regulation, the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 1227/2011 and (EU) 2019/942 to improve the Union’s protection against market manipulation in the wholesale energy market, was published in the Official Journal (OJ) of the EU. As the title indicates, this regulation particularly aims to enhance energy trading market oversight and protection by subjecting this financial market segment to similarly stringent rules as regards insider information as they apply to other financial instruments.
Some of the key provisions contained in this proposal are briefly described below:
– the definition of „market manipulation“ in Regulation (EU) No 1227/2011, the Regulation on Energy Market Integrity and Transparency (REMIT), would be amended to include any activities related to wholesale energy products, including those that
– may provide false or misleading signals to the market as regards the supply, demand, or price of an energy product;
– may employ „fictitious devices or any other form of deception“ that will lead or are likely to lead to false or misleading signals to the market; and
– may keep prices at an „artificial level“;
– national competent authorities (NCAs) would be required to exchange information on possible market manipulations with ACER, the European Union Agency for the Cooperation of Energy Regulators, ESMA, the European Securities and Markets Authority, and their corresponding local financial regulatory authorities on a regular basis (at least quarterly);
– the requirements upon central platforms that aggregate and disseminate energy market information such as Inside Information Platforms (IIPs) would be enhanced to oblige them to register with and be authorized by ACER. Additionally, IIPs would have to adopt policies and procedures that allow the verification of the received information and the prompt access to such. Finally, they will have to adopt policies to prevent conflicts of interest which is particularly relevant to those IIPs that also function as organized markets or market participants. Likewise, market participants will be required to disclose and – if necessary – resubmit inside information to IIPs in a timely manner.
– the requirements upon Registered Reporting Mechanisms (RRMs) would also be enhanced to require prior authorization by ACER and to oblige them to „check transaction reports for completeness“. Furthermore, RRMs must have policies and procedures in place to ensure IT-system soundness and adequate back-up mechanisms. ACER, on the other hand, would have to launch a central register of RRMs;
– direct electronic access providers and shared order-book providers will be required to monitor trading activity to detect any potential market manipulation and report such to ACER. They will also have to forward to ACER daily specified trade and order information;
– market participants using algorithmic trading would be required to notify their NCAs and ACER of such activity and would be required to keep on record any policies and procedures in this context; and
– ACER will be required to publish daily a LNG (liquified natural gas) price assessment and a LNG benchmark based upon collected data.
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As these are only the key provisions contained in the document, please refer to the original proposal for more detailed, comprehensive information.