Sittings · Document
DRAFT OPINION (COM(2023)0147 – C90050/2023 – 2023/0076(COD)) 2023-05-31
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
Committee on Economic and Monetary Affairs · Rapporteur: Ondřej Kovařík
AMENDMENTS
The Committee on Economic and Monetary Affairs calls on the Committee on Industry, Research and Energy, as the committee responsible, to take the following into account:
Amendment 1
Proposal for a regulation
Recital 2
| Text proposed by the Commission | Amendment |
| (2) Financial instruments, including energy derivatives, traded on energy markets are of increasing importance. Due to the increasingly close interrelation between financial markets and energy wholesale markets, Regulation (EU) No 1227/2011 should be better aligned with the financial market legislation such as Regulation (EU) No 596/2014 of the European Parliament and of the Council17 , including with respect to the definitions of market manipulation and inside information respectively. More specifically the definition of market manipulation in Regulation (EU) No 1227/2011 should be slightly adjusted to mirror Article 12 of Regulation (EU) No 596/2014. To that end, the definition of market manipulation under Regulation (EU) No 1227/2011 should be adjusted to capture the entering into any transaction, or issuing any order to trade, but also any other behaviour relating to wholesale energy products which: (i) gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products; (ii) secures, or is likely to secure, by a person, or persons acting in collaboration, the price of one or several wholesale energy products at an artificial level, or (iii) employs a fictitious device or any other form of deception or contrivance which gives, or is likely to give, false or misleading signals regarding the supply of, demand for, or price of wholesale energy products. | (2) Those wholesale energy products that are financial instruments, including energy derivatives, traded on energy markets are of increasing importance. Due to the increasingly close interrelation between financial markets and energy wholesale markets, Regulation (EU) No 1227/2011 should be better aligned with the financial market legislation such as Regulation (EU) No 596/2014 of the European Parliament and of the Council17 , including with respect to the definitions of market manipulation and inside information respectively. Alignment between this Regulation and financial markets legislation should ensure that national regulatory authorities, supervising energy markets, and competent financial authorities, supervising financial markets, can apply relevant legislation by taking into account the specificities of the energy markets. More specifically the definition of market manipulation in Regulation (EU) No 1227/2011 should be slightly adjusted to align it with Article 12 of Regulation (EU) No 596/2014. To that end, the definition of market manipulation under Regulation (EU) No 1227/2011 should be adjusted to capture the entering into any transaction, or issuing any order to trade, but also any other behaviour relating to wholesale energy products which: (i) gives, or is likely to give, false or misleading signals as to the supply of, demand for, or price of wholesale energy products; (ii) secures, or is likely to secure, by a person, or persons acting in collaboration, the price of one or several wholesale energy products at an artificial level, or (iii) employs a fictitious device or any other form of deception or contrivance which gives, or is likely to give, false or misleading signals regarding the supply of, demand for, or price of wholesale energy products. |
| __________________ | __________________ |
| 17 Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1). | 17 Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 12.6.2014, p. 1). |
Or. en
Amendment 2
Proposal for a regulation
Recital 3
| Text proposed by the Commission | Amendment |
| (3) The definition of inside information should also be adjusted to mirror Regulation (EU) 596/2014. In particular, where inside information concerns a process which occurs in stages, each stage of the process as well as the overall process could constitute inside information. An intermediate step in a protracted process may in itself constitute a set of circumstances or an event which exists or where there is a realistic prospect that they will come into existence or occur, on the basis of an overall assessment of the factors existing at the relevant time. However, that notion should not be interpreted as meaning that the magnitude of the effect of that set of circumstances or that event on the prices of the financial instruments concerned must be taken into consideration. An intermediate step should be deemed to be inside information if it, by itself, meets the criteria laid down in this Regulation for inside information. | (3) The definition of inside information should also be adjusted to be aligned with Regulation (EU) 596/2014. In particular, where inside information concerns a process which occurs in stages, each stage of the process as well as the overall process could constitute inside information. An intermediate step in a protracted process may in itself constitute a set of circumstances or an event which exists or where there is a realistic prospect that they will come into existence or occur, on the basis of an overall assessment of the factors existing at the relevant time. However, that notion should not be interpreted as meaning that the magnitude of the effect of that set of circumstances or that event on the prices of the financial instruments concerned must be taken into consideration. An intermediate step should be deemed to be inside information if it, by itself, meets the criteria laid down in this Regulation for inside information. |
Or. en
Amendment 3
Proposal for a regulation
Recital 6 a (new)
| Text proposed by the Commission | Amendment |
| (6 a) ACER and the European Securities and Markets Authority (ESMA) should closely coordinate on issues arising from the adoption of this Regulation in order to ensure that the most complete data sets are available and that action can be taken as needed by the European or national regulatory authorities or competent financial authorities, as applicable. |
Or. en
Amendment 4
Proposal for a regulation
Recital 8
| Text proposed by the Commission | Amendment |
| (8) The use of trading technology has evolved significantly in the past decade and is increasingly used on the wholesale energy markets. Many market participants use algorithmic trading and high frequency algorithmic techniques with minimal or no human intervention. The risks arising from these practises should be addressed under Regulation (EU) No 1227/2011. | (8) The use of trading technology has evolved significantly in the past decade and is increasingly used on the wholesale energy markets. Many market participants use algorithmic trading and high frequency algorithmic techniques with minimal or no human intervention. The risks arising from these practises should be clearly addressed under Regulation (EU) No 1227/2011. |
Or. en
Amendment 5
Proposal for a regulation
Recital 10
| Text proposed by the Commission | Amendment |
| (10) To improve the Agency’s market monitoring and make data collection more complete, the current reporting regime needs improvement. The data collected should be expanded to overcome gaps in the data collection and include coupled markets, new balancing markets, contracts for balancing markets and products that have potential delivery in the Union. Organised market places should be required to provide the full order book data set to the Agency. Order book providers should also be designated as persons professionally arranging transactions subject to the obligation to monitor and report suspected breaches. | (10) To improve the Agency’s market monitoring and make data collection more complete, the current reporting regime needs improvement. The data collected should be expanded to overcome gaps in the data collection and include coupled markets, new balancing markets and contracts for balancing markets. Organised market places should be required to provide the full order book data set to the Agency. |
Or. en
Amendment 6
Proposal for a regulation
Recital 11
| Text proposed by the Commission | Amendment |
| (11) Inside Information Platforms (IIPs) should play an important role for the effective and timely publication of inside information. It should be mandatory to disclose inside information on dedicated IIPs to make the information easily accessible and enhance transparency. To ensure trust in the IIPs they should be authorised and registered. | (11) Inside Information Platforms (IIPs) should play an important role for the effective and timely publication of inside information. It should be mandatory for market participants to disclose inside information on dedicated IIPs to make the information easily accessible and enhance transparency. To ensure trust in the IIPs they should be authorised and registered. |
Or. en
Amendment 7
Proposal for a regulation
Recital 13
| Text proposed by the Commission | Amendment |
| (13) In order to facilitate monitoring to detect potential trading based on inside information and data quality of collected information, the collection of inside information needs to be aligned with the current processes for trade data reporting. | (13) In order to facilitate monitoring to detect potential trading based on inside information and data quality of collected information, the collection of inside information needs to be aligned with the current processes for trade data reporting while ensuring that reporting overlaps arising from obligations under other pieces of linked legislation, such as financial services, legislation are minimised. |
Or. en
Justification
While data collection is imperative, we also need to facilitate reporting standards horizontally in EU legislation to avoid duplicative reporting from market participants
Amendment 8
Proposal for a regulation
Recital 14
| Text proposed by the Commission | Amendment |
| (14) Persons professionally arranging and executing transactions have the obligation to report suspicious transactions in breach of the provisions on insider trading and market manipulation. To enhance the possibility of enforcement of such breaches, the persons professionally arranging transactions should also have the obligation to report suspicious orders and potential breaches of the obligation to publish inside information. Direct electronic access providers and shared order-book providers should be considered as persons professionally arranging transactions. | (14) Persons professionally arranging transactions have the obligation to report suspicious transactions in breach of the provisions on insider trading and market manipulation. To enhance the possibility of enforcement of such breaches, the persons professionally arranging transactions should also have the obligation to 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 persons professionally arranging transactions. |
Or. en
Amendment 9
Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point a
Regulation (EU) No 1227/2011
Article 1 – Paragraph 2
| Text proposed by the Commission | Amendment |
| 2. This Regulation applies to trading in wholesale energy products. This Regulation is without prejudice to the application of Directive (EU) 2014/65, Regulation (EU) 600/2014 and Regulation (EU) 648/2012 as regards activities involving financial instruments as defined under Article 4(1)(15) of Directive (EU) 2014/65 as well as to the application of European competition law to the practices covered by this Regulation. | 2. This Regulation applies to trading in wholesale energy products. This Regulation is without prejudice to the application of Directive (EU) 2014/65, Regulations (EU) 596/2014, Regulation (EU) 600/2014 and Regulation (EU) 648/2012 as regards activities involving financial instruments as defined under Article 4(1), point (15) of Directive (EU) 2014/65 as well as to the application of European competition law to the practices covered by this Regulation. |
Or. en
Justification
Adding reference to the Market Abuse Regulation
Amendment 10
Proposal for a regulation
Article 1 – paragraph 1 – point 1 – point b
Regulation (EU) No 1227/2011
Article 1 – Paragraph 3 – Subparagraph 2
| Text proposed by the Commission | Amendment |
| The Agency, national regulatory authorities, ESMA and competent financial authorities of the Member States shall in particular exchange relevant information and data on a regular, at least quarterly, basis regarding potential breaches of Regulation (EU) No 596/2014 of the European Parliament and of the Council involving wholesale energy products covered by this Regulation. | The Agency, national regulatory authorities, ESMA and competent financial authorities of the Member States shall exchange relevant information and data on a regular basis regarding potential breaches of Regulation (EU) No 596/2014 of the European Parliament and of the Council involving wholesale energy products covered by this Regulation. |
Or. en
Justification
Information sharing between ACER, NRAs, ESMA and NCAs is essential. Rather than prescriptively setting a timeframe, this should be done on a regular or continuous basis in order to spot at an early point any potential breaches of the Market Abuse Regulation and to take appropriate action to mitigate the effects of such breaches. Therefore the authorities should be free to share information as frequently as possible.
Amendment 11
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point g
Regulation (EU) No 1227/2011
Article 2 – paragraph 1 – point 7
| Text proposed by the Commission | Amendment |
| (7) ‘market participant’ means any person, including transmission system operators and persons professionally arranging or executing transactions when trading on their own account, who enters into transactions, including the placing of orders to trade, in one or more wholesale energy markets; ”; | (7) ‘market participant’ means any person, including transmission system operators and distribution system operators, storage system operators and LNG system operators, who enter into transactions, including the placing of orders to trade, in one or more wholesale energy markets; ”; |
Or. en
Justification
This is to clarify the definition of market participant and make it clearer that it is any of the mentioned operators entering into transactions, and that PPATs are not included if they do not enter into transactions. This is also important to ensure that liquidity remains in the market through conflating PPATs with actual market participants
Amendment 12
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point h
Regulation (EU) No 1227/2011
Article 2 – paragraph 1 – point 8a
| Text proposed by the Commission | Amendment |
| (8a) 'person professionally arranging or executing transactions' means a person professionally engaged in the reception and transmission of orders for, or in the execution of transactions in, wholesale energy products;”; | (8a) 'person professionally arranging transactions' means a person professionally engaged in the reception and transmission of orders for, or in the arrangement of transactions in, wholesale energy products that are not financial instruments ;”; |
Or. en
Justification
For consistency with the definition of market participants and to avoid double reporting
Amendment 13
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point j
Regulation (EU) No 1227/2011
Article 2 – paragraph 1 – point 18
| Text proposed by the Commission | Amendment |
| (18) ‘algorithmic trading’ means trading in wholesale energy products where a computer algorithm automatically determines individual parameters of orders to trade such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission, with limited human intervention or no such intervention at all, not including any system that is only used for the purpose of routing orders to one or more organised market places or for the processing of orders involving no determination of any trading parameters or for the confirmation of orders or the post-trade processing of executed transactions; | (18) ‘algorithmic trading’ means trading in wholesale energy products that are not financial instruments where a computer algorithm automatically determines individual parameters of orders to trade such as whether to initiate the order, the timing, price or quantity of the order or how to manage the order after its submission, with limited human intervention or no such intervention at all, not including any system that is only used for the purpose of routing orders to one or more organised market places or for the processing of orders involving no determination of any trading parameters, or for the confirmation of orders or the post-trade processing of executed transactions; |
Or. en
Amendment 14
Proposal for a regulation
Article 1 – paragraph 1 – point 2 – point j
Regulation (EU) No 1227/2011
Article 2 – paragraph 1 – point 19
| Text proposed by the Commission | Amendment |
| (19) ‘direct electronic access’ means an arrangement whereby a member, participant or client of an organised market place allows another person to use its trading code so the person may electronically transmit orders to trade relating to a wholesale energy product directly to the organised market place, including arrangements which involve the use by a person of the infrastructure of the member, participant or client, or any connecting system provided by the member, participant, or client, to transmit the orders to trade (direct market access) and arrangements whereby such an infrastructure is not used by a person (sponsored access); | (19) ‘direct electronic access’ means an arrangement whereby a member, participant or client of an organised market place allows another person to use its trading code so the person may electronically transmit orders to trade relating to a wholesale energy product, that is not a financial instrument, directly to the organised market place, including arrangements which involve the use by a person of the infrastructure of the member, participant or client, or any connecting system provided by the member, participant, or client, to transmit the orders to trade (direct market access) and arrangements whereby such an infrastructure is not used by a person (sponsored access); |
Or. en
Justification
This is necessary to avoid duplication of reporting and regulatory complexity between REMIT and MiFID.
Amendment 15
Proposal for a regulation
Article 1 – paragraph 1 – point 6
Regulation (EU) No 1227/2011
Article 5a – paragraph 1
| Text proposed by the Commission | Amendment |
| 1. A market participant that engages in algorithmic trading shall have in place effective systems and risk controls suitable to the business it operates to ensure that its trading systems are resilient and have sufficient capacity, are subject to appropriate trading thresholds and limits and prevent the sending of erroneous orders to trade or the systems otherwise functioning in a way that may create or contribute to a disorderly market. The market participant shall also have in place effective systems and risk controls to ensure that the trading systems comply with this Regulation and with the rules of an organised market place to which it is connected. The market participant shall have in place effective business continuity arrangements to deal with any failure of its trading systems and shall ensure its systems are fully tested and properly monitored to ensure that they meet the requirements laid down in this paragraph. | 1. A market participant that engages in algorithmic trading shall have in place effective systems and risk controls suitable to the business it operates to ensure that its trading systems are resilient and have sufficient capacity, are subject to appropriate trading thresholds and limits, and prevent the sending of erroneous orders to trade or the systems otherwise functioning in a way that may create or contribute to a disorderly market, thereby preventing unnecessary market volatility. The market participant shall also have in place effective systems and risk controls to ensure that the trading systems comply with this Regulation and with the rules of an organised market place to which it is connected. The market participant shall have in place effective business continuity arrangements to deal with any failure of its trading systems and shall ensure its systems are fully tested and properly monitored by one or more designated persons on a regular basis to ensure that they meet the requirements laid down in this paragraph. |
Or. en
Justification
It's important that algorithmic trading has enough safeguards, in the form of persons monitoring the sending of data, to ensure that it does not contribute to market volatility, as was seen during the 2022 period.
Amendment 16
Proposal for a regulation
Article 1 – paragraph 1 – point 6
Regulation (EU) No 1227/2011
Article 5a – paragraph 2 – subparagraph 3
| Text proposed by the Commission | Amendment |
| The market participant shall arrange for records to be kept in relation to the points referred to in this paragraph and shall ensure that those records are sufficient to enable its national regulatory authority to monitor compliance with this Regulation. | The market participant shall arrange for records to be kept in relation to the points referred to in this paragraph for a period not exceeding 5 years, and shall ensure that those records are sufficient to enable its national regulatory authority to monitor compliance with this Regulation. |
Or. en
Amendment 17
Proposal for a regulation
Article 1 – paragraph 1 – point 6
Regulation (EU) No 1227/2011
Article 5a – paragraph 3 – subparagraph 3
| Text proposed by the Commission | Amendment |
| The market participant shall arrange for records to be kept in relation to the matters referred to in this paragraph and shall ensure that those records be sufficient to enable its national regulatory authority to monitor compliance with this Regulation. | The market participant shall arrange for records to be kept in relation to the matters referred to in this paragraph for a period not exceeding 5 years, and shall ensure that those records be sufficient to enable its national regulatory authority to monitor compliance with this Regulation. |
Or. en