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-PA-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 draft regulation that changes 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 ACER and ESMA to coordinate.¶¶¶ They expand data collection to coupled markets, new balancing markets and balancing contracts, and require organised market places to provide full order book data.¶ They make disclosure of inside information on Inside Information Platforms mandatory for market participants, and require those platforms to be authorised and registered.¶ They narrow the definition of market participant to exclude persons professionally arranging transactions who do not enter into transactions, and require reporting of suspicious orders and breaches of publication obligations.¶¶¶ They add risk controls and record-keeping rules for algorithmic trading, including records kept for a period not exceeding 5 years.¶¶¶
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 Regulation (EU) No 596/2014, expand data collection, require Inside Information Platform disclosure, narrow the market participant definition, and add algorithmic trading safeguards.¶¶¶
Key points
- The definition of market manipulation in Regulation (EU) No 1227/2011 should be aligned with Article 12 of Regulation (EU) No 596/2014.¶
- The definition of inside information should be aligned with Regulation (EU) No 596/2014, and each stage of a process may itself constitute inside information.¶
- ACER and the European Securities and Markets Authority should closely coordinate to ensure complete data sets and enable action by authorities.¶
- Risks from algorithmic trading and high frequency algorithmic techniques should be clearly addressed under Regulation (EU) No 1227/2011.¶
- Data collection should be expanded to include coupled markets, new balancing markets and contracts for balancing markets, and organised market places should provide the full order book data set to the Agency.¶
- Market participants should be required to disclose inside information on dedicated Inside Information Platforms, which should be authorised and registered.¶
- Collection of inside information should be aligned with trade data reporting while minimising overlaps with other legislation such as financial services legislation.¶¶
- Persons professionally arranging transactions should report suspicious orders and potential breaches of the obligation to publish inside information; direct electronic access providers and shared order-book providers should not be considered as such persons.¶
- Regulation (EU) No 1227/2011 should apply without prejudice to Regulations (EU) 596/2014, (EU) 600/2014 and (EU) 648/2012 as regards activities involving financial instruments.¶¶
- The Agency, national regulatory authorities, ESMA and competent financial authorities should exchange relevant information on a regular basis, rather than at least quarterly, regarding potential breaches of Regulation (EU) No 596/2014.¶¶
- The definition of market participant should cover transmission system operators, distribution system operators, storage system operators and LNG system operators that enter into transactions, and exclude persons professionally arranging transactions who do not enter into transactions.¶¶
- Algorithmic trading rules should require effective systems and risk controls, business continuity arrangements, and testing and monitoring by one or more designated persons; records should be kept for a period not exceeding 5 years.¶¶¶
Who is affected
- Market participants in wholesale energy markets, who must disclose inside information on Inside Information Platforms and keep records for a period not exceeding 5 years.¶¶¶
- Persons professionally arranging transactions, who must report suspicious orders and potential breaches of publication obligations.¶
- Organised market places, which must provide the full order book data set to the Agency.¶
- ACER, national regulatory authorities, ESMA and competent financial authorities, which must exchange information on a regular basis.¶
- Transmission system operators, distribution system operators, storage system operators and LNG system operators, which are included in the definition of market participant when they enter into transactions.¶