The derivatives industry has called for
the Agency for the Cooperation of Energy
Regulators’ (Acer) to up the ante in its support
for the market, amid fears that it may lack the resources
required to knowledgably apply its Remit requirements to
derivatives, after a relatively smooth implementation.
Under Remit, which came into force on
October 7, market participants are required to report their
standard power and gas trades to the regulator via a registered
reporting mechanism (RRM). The reporting of more complex
over-the-counter trades is set to follow six months later on
April 7 2016.
Acer’s Regulation on
Wholesale Energy Market Integrity – Remit –
has been generally well absorbed, said Rob Barnes, manager for
regulation at FIA Europe told FOW, "On the whole,
implementation seems to be settling down with firms; things
have gone relatively smoothly, especially when compared to
Mifir EMIR. It is the RRMs that have faced support and
communication issues with Acer."
A spokesperson for Acer told FOW that
implementation has been doing well. "The Agency receives
currently more than one million data records of wholesale
energy market transactions, including orders to trade, executed
at organised market places per day reported by 37 Registered
Reporting Mechanisms (RRMs). This is much more than the Agency
expected. However, the Agency’s IT systems are
able to handle the workload."
However, there are murmurs of discontent.
Six weeks after the rules kicked in, market participants have
reported poor and sporadic communication and support from Acer,
with some suggesting that the scope of the market covered by
Remit may be too much for the regulator to successfully
Murray Abel, Service Delivery team manager
at Abide Financial said, "The major risk still associated with
Remit reporting for Abide and their market participants is
around responses from Acer. This coupled with a very poorly
documented procedure for updating records means there is a bit
of a back log in fixing some validation errors.
"We have contacted Acer to identify the
correct procedures needed to amend records in different states
however the response, once received, has been brief and
unclear," he added.
The Acer spokesman told FOW that the
regulator has been working closely with the market to sort any
issues and is, "doing its utmost to provide all reporting
parties with as much support and information as possible."
The Polish Power Exchange, TGE, is an RRM
for Remit. Jan Noworyta, director of GPW/Remit department at
TGE told FOW that implementation has been smooth, though has
not been without technical issues.
"It should be noted, that such large-scale
and innovative project, covering the whole European energy
market, is associated with a number of immense challenges,
concerning commitment of sufficient human resources, technology
and adequate budget, granted by the European Commission," said
Nathaniel Lalone, a partner at law firm
Katten Muchin Rosenman, said, "The big issue remains that it is
one thing to report data, but another for it to be of use; can
Acer make effective use of the data submitted? This remains to
The concerns come six weeks after
Acer’s transaction reporting requirements,
Regulation on Wholesale Energy Market Integrity (Remit), were implemented on October 7.
Before the rules came into effect in
October, there was widespread concern that the market was not
ready for the new requirements.
A London-based source who did not wish to
be named told FOW, "Acer’s halting and sometimes
incomplete responses to legitimate industry questions and
concerns suggests that Acer may lack the resources to
knowledgeably apply REMIT requirements to the derivatives
"It would appear that, as derivatives
market participants began to realise that Acer was unlikely to
provide meaningful, timely guidance, the choice was made to
proceed with a good-faith effort to establish arrangements that
were responsive to REMIT requirements, even if they were not
officially blessed by Acer," said a London-based lawyer.
On its technical support, the Acer
spokesperson added, "In the first days, there were only some
delays in the issuing of receipts which was already sorted out
and it is now working fine… For a large pan-European IT
project of this scale and taking into account the circumstances
and resource constraints under which the Agency had to launch
it, against all odds, there were surprisingly only little
issues that some reporting parties had to deal with."
While market participants suggest that
implementation has thus far been relatively smooth, this may be
down to market players themselves, rather than the energy
On the integration, a spokesperson for
London-based commodities broker, Marex Spectron, said,
"Integrating the full number of RRM’s that
registered would have made the timeline difficult to achieve,
but the market took a sensible approach and efforts were
focussed on the EFET solution."
Katten’s Lalone told FOW,
"Doom and gloom was expected, but on the whole, implementation
has been relatively smooth to date. This is predominantly due
to the fact that industry participants worked together to find
pragmatic solutions where regulatory guidance was
Barnes from the FIA warns that it may be a
little early to tell how successful Acer’s Remit
implementation has been. "On the whole, implementation seems to
be settling down with firms; things have gone relatively
smoothly, especially when compared to EMIR. It is the RRMs that
have faced support and communication issues with Acer."
"Ultimately, Acer has to start using and
drawing conclusions from the data before we can ascertain the
validity of it," he added.
As reported by FOW a month before the
rules kicked in, the regulator had made waves in the lead-up to October 7, but has
since been rather quiet; perhaps focusing on the rules which
require far more resources than it expected.