Stricter rules for wholesale electricity and natural-gas markets to come into force
The European rules regarding integrity and transparency on wholesale electricity and natural-gas markets will be tightened as of May 7, 2024. This follows from amendments made to the European REMIT regulation (Regulation on wholesale Energy Market Integrity and Transparency). The Netherlands Authority for Consumers and Markets enforces compliance with these rules, and can impose heavy sanctions in the case of violations of those rules.
The Dutch wholesale market for natural gas (TTF) is, by far, the largest in Europe. The volume of natural gas that is traded on this trading platform is three times the volume of all other European natural-gas markets combined. The trade on the Dutch TTF has considerable influence on energy prices that consumers and businesses in the Netherlands and in other European countries must pay. That is why ACM makes sure that market participants on the TTF and other Dutch wholesale energy markets comply with the European REMIT regulation.
What will change with the new rules?
With the stricter rules, additional safeguards for fair competition and the price formation on the wholesale energy markets are put in place, which will benefit end-users. For example, the EU rules on energy market transparency and integrity will be better aligned with those on the financial markets, REMIT’s scope is expanded, and more information on algorithmic trading must be submitted.
Under the new rules, market participants from non-EU countries must, in the EU member state where they are registered, appoint a representative for their interactions with energy regulators. This requirement will come into effect at a slightly later point in time, and will apply as of November 8, 2024. Traders already need to report suspicious market behaviours regarding inside information and market manipulation to regulators, but now they will have to do so within four weeks. Market participants that use trading algorithms and market participants that offer direct electronic access to organized marketplaces are required to report this to ACM.
In addition, REMIT’s scope will change, too. All wholesale energy products now fall under REMIT. REMIT will also apply to contracts and derivatives for storage of electricity and natural gas (including LNG) in the EU. Also, REMIT will apply to energy products that were previously regulated by the Dutch Authority for the Financial Markets (AFM), with which ACM will collaborate more closely now. When receiving signals regarding possible violations with regard to which both regulators have jurisdiction, AFM and ACM will exchange information, and work together in order to prevent any overlap. The European energy agency ACER will be granted more-robust powers for assessing possible violations with cross-border effects in collaboration with national regulators.
Under the revised REMIT regulation, the most important rules on the wholesale energy markets will remain in place: market manipulation and insider trading are prohibited. In addition, market participants are required to publish inside information in a timely and effective manner, they need to register with ACM, and they need to report trading data to the European energy agency ACER. Trading platforms are required to submit notifications regarding suspicious trading behaviours to the energy regulator, which, in the Netherlands, is ACM.
For a more detailed overview of the changes, please visit About REMIT | www.acer.europa.eu. ACER has also published an open letter containing more detailed explanations, for example, about data reporting, registration of market participants from non-EU countries, and notifying algorithmic trading.