Energy Risk Europe: Remit language too loose, say panellists

Panellists at Energy Risk Europe's regulatory round table yesterday raised concerns about the European Union's (EU) Regulation on Energy Market Integrity and Transparency (Remit). The new rules, which will come into force in December, have energy firms worried about perceived weaknesses in the language of the legislation and the rapidity of its implementation by energy firms.

Earlier this week, the EU formally adopted the new Remit legislation, which had been approved by the European Parliament in mid-September. This is fairly rapid treatment for EU legislation, which had only been proposed in December 2010. It is expected to be published in the EU's official journal by the end of November, which would make it binding 20 days later, in December.

The legislation extends the framework against market abuse and insider trading that already exists in the securities industry to the EU wholesale energy markets, and is designed to complement new proposals to expand the scope of the Market Abuse Directive to cover derivatives, including energy derivatives and emissions trading. It will require firms to provide detailed transaction records to the European Agency for the Cooperation of Energy Regulators and to register with their national regulator.

But round-table panellists said the speed with which the legislation – a priority for the Hungarian presidency of the EU – has been implemented means the definition of insider trading is too loose.

"This piece of legislation enjoyed broad support in the parliament and maybe therefore not much attention was put to the details in the wording," said Gerd Stuhlmacher, director of legal and compliance at E.on Trading. "So maybe, therefore, nobody really spotted the weaknesses in the language. But if you look into the text carefully, you will find some weaknesses."

Panellists called for a greater discussion around the definition of insider information in the new rules. They also expressed concern about the fact that regulatory guidance around the EU legislation would not be published before they had to comply with the new rules in December.