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
ECON-AD-749178
Committee on Economic and Monetary Affairs · Rapporteur: Ondřej Kovařík
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The Committee on Economic and Monetary Affairs proposes amendments to a proposed regulation that amends Regulations (EU) No 1227/2011 and (EU) 2019/942 on protection against market manipulation in the wholesale energy market.¶¶ The amendments align definitions of market manipulation and inside information with Regulation (EU) No 596/2014, and require national regulators to share information with financial and competition authorities, ACER and ESMA.¶¶¶ They add rules on algorithmic trading, record-keeping for five years, and cooperation between ACER and ESMA on inspections.¶¶¶ They also adjust definitions of market participant, organised market place, LNG trading and benchmarks, and exclude certain financial instruments from parts of the regulation.¶¶¶
Committee position. The Committee on Economic and Monetary Affairs calls on the Committee on Industry, Research and Energy to take into account its amendments, which align definitions with financial market legislation, strengthen information sharing and add rules on algorithmic trading and inspections.¶¶¶
Key points
- Aligns the definition of market manipulation in Regulation (EU) No 1227/2011 with Article 12 of Regulation (EU) No 596/2014, covering transactions, orders to trade and other behaviour.¶
- Aligns the definition of inside information with Regulation (EU) No 596/2014, including for processes occurring in stages.¶
- Requires national regulatory authorities to share relevant information with national financial and competition authorities, ACER and ESMA.¶
- Adds a recital requiring ACER and ESMA to coordinate supervisory activities and ensure unobstructed information flow.¶
- States that risks from algorithmic and high-frequency trading should be clearly addressed under Regulation (EU) No 1227/2011.¶
- Requires collection of inside information to be aligned with trade data reporting while minimising overlaps with other legislation.¶¶
- Allows the Agency to cooperate closely with ESMA on on-site inspections where necessary.¶¶
- Excludes wholesale energy products that are financial instruments under Directive (EU) 2014/65 and Regulation (EU) No 596/2014 from Articles 3, 5, 5a and Article 9(1), second subparagraph.¶
- Requires the Agency, national regulatory authorities, ESMA and competent financial authorities to exchange relevant information on a regular basis.¶
- Amends definitions including market participant, person professionally arranging transactions, inside information platform, OTC wholesale energy contract, organised market place, LNG trading, benchmark and LNG benchmark.¶¶¶
- Treats cancelling, amending or modifying an existing order, or establishing links between orders, as insider trading when done using inside information.¶
- Requires market participants engaged in algorithmic trading to have effective systems and risk controls, and to keep records for five years.¶¶¶
Who is affected
- Market participants in wholesale energy markets, including those using algorithmic trading, must comply with new risk controls and record-keeping.¶¶¶
- National regulatory authorities must share information with financial and competition authorities, ACER and ESMA.¶¶
- ACER and ESMA must coordinate supervisory activities and cooperate on inspections.¶¶¶
- Transmission system operators, distribution system operators, storage system operators and LNG system operators are included in the definition of market participant.¶