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REPORT (COM(2023)0147 – C90050/2023 – 2023/0076(COD))

On 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

A-9-2023-0261

Committee on Industry, Research and Energy · Rapporteur: Maria da Graça Carvalho

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Parliament's amended version of a Commission proposal to amend Regulations (EU) No 1227/2011 and (EU) 2019/942 on wholesale energy market integrity and transparency (REMIT). It adjusts the definitions of market manipulation and inside information to mirror Regulation (EU) No 596/2014, and adds definitions for algorithmic trading, direct electronic access, order books, LNG trading and benchmarks. It requires market participants to disclose inside information through authorised Inside Information Platforms and to report trades through authorised Registered Reporting Mechanisms, both supervised by the Agency. It gives the Agency powers to produce a daily LNG price assessment and benchmark, to collect LNG market data, and to conduct cross-border investigations with on-site inspections, information requests and statements. It sets administrative sanctions for breaches, including maximum fines of 15%, 2% and 1% of total turnover for legal persons and EUR 5 000 000, EUR 1 000 000 and EUR 500 000 for natural persons. It requires the Commission to assess the effectiveness of criminal penalties by 1 June 2025 and to review the Regulation by 1 June 2027.

Committee position. The Committee on Industry, Research and Energy proposes to adopt Parliament's position at first reading with amendments to the Commission proposal, reinforcing the Agency's role in cross-border investigations, clarifying definitions and rules for market participants, and reducing administrative burden.

Key points

  1. The Regulation applies to trading in wholesale energy products and is without prejudice to Regulations (EU) 596/2014, (EU) 600/2014 and (EU) 648/2012 and Directive (EU) 2014/65, and to European competition law.
  2. The Agency, national regulatory authorities, ESMA and competent financial authorities must exchange relevant information on potential breaches of Regulation (EU) No 596/2014 involving wholesale energy products at least quarterly.
  3. Market manipulation is defined to include entering into transactions, issuing, modifying or withdrawing orders, or other behaviour giving false or misleading signals, securing artificial prices, or using fictitious devices, and transmitting false or misleading benchmark input.
  4. Inside information includes information conveyed by a market participant to a service provider about pending orders, and intermediate steps of a protracted process that meet the criteria; the Commission may further specify the definition by delegated acts.
  5. Market participants must disclose inside information through Inside Information Platforms, which must be registered and authorised by the Agency, publish information close to real time and free of charge, and meet organisational and security requirements.
  6. The Agency may withdraw an IIP authorisation if it does not use it within 12 months, provided no services for six months, obtained registration by false statements, no longer meets requirements, or seriously and systematically infringes the Regulation.
  7. Market participants engaging in algorithmic trading must have effective systems and risk controls, notify the national regulatory authority and the Agency, and keep records; those providing direct electronic access must also notify.
  8. The Agency must produce and publish a daily LNG price assessment and benchmark, and LNG market participants must submit daily LNG market data free of charge through reporting channels, with fines or periodic penalty payments for non-submission.
  9. Market participants must report wholesale energy market transactions, including orders to trade, through Registered Reporting Mechanisms; organised market places must make order books available to the Agency.
  10. The Agency may carry out investigations with on-site inspections, information requests and interviews for cross-border cases, appoint an independent investigating officer, and impose fines, periodic penalty payments, public warnings or decisions requiring breaches to end.
  11. Persons professionally arranging or executing transactions must report suspicious orders or transactions to the Agency and the national regulatory authority within four weeks, and maintain arrangements to identify breaches and prevent conflicts of interest.
  12. Member States must provide for administrative sanctions including disgorgement of profits, public warnings, periodic penalty payments and pecuniary sanctions, and the Commission must assess criminal penalties by 1 June 2025 and review the Regulation by 1 June 2027.

Who is affected

  • Market participants in wholesale energy markets, including transmission, distribution, storage and LNG system operators, must report transactions and disclose inside information.
  • Inside Information Platforms and Registered Reporting Mechanisms must be authorised by the Agency and comply with organisational, security and reporting requirements.
  • National regulatory authorities must enforce the Regulation, cooperate with the Agency, and have powers to impose administrative sanctions.
  • LNG market participants must submit daily LNG market data to the Agency and may face fines or periodic penalty payments for non-submission.
  • Persons professionally arranging or executing transactions must report suspicious orders and transactions and maintain effective arrangements and procedures.

Figures and deadlines

  • IIP authorisation withdrawn if not used within 12 months or no services for the preceding six months.
  • RRM authorisation withdrawn if not used within 18 months or no services for the preceding 18 months.
  • Suspicious orders or transactions must be reported no later than four weeks from the occurrence of the suspicious event.
  • Maximum administrative pecuniary sanctions for legal persons: 15% of total turnover for breaches of Articles 3 and 5, 2% for Article 4 and 15, 1% for Article 8 and 9.
  • Maximum administrative pecuniary sanctions for natural persons: EUR 5 000 000 for Articles 3 and 5, EUR 1 000 000 for Article 4 and 15, EUR 500 000 for Article 8 and 9.
  • Fines shall not exceed 20% of annual turnover for legal persons or 20% of yearly income for natural persons.
  • Commission must assess effectiveness of criminal penalties by 1 June 2025 and review the Regulation by 1 June 2027.
  • First delegated act on fines and periodic penalty payments must be adopted by 1 March 2024.

Legal basis: Article 194(2) of the Treaty on the Functioning of the European Union