REMIT Regulation is a pioneering market monitoring framework covering trading and potential market abuse in natural gas and electricity wholesale markets in the EU. ACER has been tasked with the Technical Implementation of REMIT regulation. This practitioner paper aims to provide insight into the relevant work to be carried out and the most important milestones achieved within the year.
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Wholesale Energy Market Monitoring - ACER and the Technical Implementation of REMIT.pdf
REMIT Regulation is a pioneering market monitoring framework covering trading and potential market abuse in natural gas and electricity wholesale markets in the EU. ACER has been tasked with the Technical Implementation of REMIT regulation. This practitioner paper aims to provide insight into the relevant work to be carried out and the most important milestones achieved within the year.
REMIT Regulation is a pioneering market monitoring framework covering trading and potential market abuse in natural gas and electricity wholesale markets in the EU. ACER has been tasked with the Technical Implementation of REMIT regulation. This practitioner paper aims to provide insight into the relevant work to be carried out and the most important milestones achieved within the year.
and the Technical Implementation of REMIT S.Papageorgiou
AbstractThe Agency for the Cooperation of Energy
Regulators (ACER) has been tasked with the technical implementation of REMIT Regulation (Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency). The REMIT Regulation is a pioneering market monitoring framework covering trading and potential market abuse in natural gas and electricity wholesale markets in the EU. REMIT in particular prohibits market manipulation and insider trading and introduces obligations for the disclosure of inside information and the reporting of specified data to ACER. The Agency will store the collected data in a central data warehouse for purposes of analysis and selective sharing as part of its market monitoring activity. Given the strict implementation timeline stipulated by the REMIT Implementing Acts (Commission Implementing Regulation (EU) No 1348/2014) and the forthcoming starting dates for the reporting of different categories of data to ACER, 2015 is a particularly important year in REMIT implementation history, especially concerning technical aspects. Looking ahead, this practitioner paper aims to provide insight into the relevant work to be carried out and the most important milestones to be achieved within the year. General provisions of the regulation and the implementation work performed thus far (REMIT Annual Report 2013) are also covered as background information. Index TermsData collection; market monitoring; REMIT; technical implementation; wholesale energy markets;
I. INTRODUCTION
s EU national markets progressively evolve into a single,
connected and integrated market, the necessity to perform effective cross-border monitoring has led to the preparation and adoption of the REMIT Regulation by the European Parliament and the European Council. REMIT Regulation entered into force on 28 December 2011. Its application brings significant impact on the completion of the EU internal energy market. With no precedence, this sector-
978-1-4673-7172-8/15/$31.00 2015 European Union
specific framework allows for detection and prevention of
market abuse in European wholesale electricity and gas markets. Ultimately, the effective implementation of the Regulations provisions should lead to increased confidence in the market integrity, safeguard fair competition and ensure efficient prices reflective of proper market functioning- for EU consumers. Earlier within 2011, the Agency for the Cooperation of Energy Regulators (ACER) was set up by the Third Energy Package with a mandate to advance the EU internal energy market. One of the key energy policy objectives served is the work towards a monitored and transparent market, preventive of abusive practices. Consequently, the implementation of REMIT including legal, policy and technical aspects- was assigned to ACER. II. LEGISLATIVE BACKGROUND The Articles of the Regulation provide the foundations based on which the Agencys priorities are determined. They define obligations for a variety of industry stakeholder groups. Market Participants (MPs) must register with their competent National Regulatory Authority (NRAs) (Article 9). In addition, MPs must report to the Agency wholesale energy market transactions, including orders to trade (Article 8). This can be done by the participants themselves, or via authorised parties acting on their behalf. The prohibition of trading based on inside information (Article 3) as well as of market manipulation (Article 5) is specified. Furthermore, the obligation to publish inside information is imposed on MPs (Article 4). The Agency is empowered to monitor the trading activity, detect and deter trading based on inside information and market manipulation. According to the provisions of Article 8, ACER will collect and analyse an array of data from the energy markets, in order to effectively conduct its monitoring and surveillance duties. According to Article 10, the Agency will have the necessary means in place to share collected data with specific competent authorities such as financial, competition and regulatory authorities of the Member States.
Article 13 provides the NRAs with the necessary investigatory
and enforcement powers which, upon being exercised, can ensure the respect of the prohibitions of Articles 3 and 5 and the obligations defined in Article 4. As stipulated in Article 8, the European Commission shall define the rules for the provision of data to the Agency. This is done by the adoption of an additional legislative text, the Implementing Regulation. This defines in detail the reportable trade and fundamental data. It also establishes the channels for reporting and the timing at which each data type reporting will commence (alongside the regularity of this reporting.)
composed of three main stages; ARIS Pilot stage, ARIS
Operational Prototype stage and the ARIS Production stage. The conceptual 4-tier architecture of the system is reflective of the REMIT Regulation provisions in relevance to the Agencys responsibilities (see Fig. 2).
III. IMPLEMENTATION BACKGROUND
The entry into force of the Implementing Regulation on 7 January 2015 has effectively set in stone the implementation timelines for data collection under REMIT. Fig.1, presents the various milestones to be met following the entry into force of the Implementing Regulation. The two most critical milestones within 2015 are: -
NRAs must set up national registration systems
for MPs by 17 March 2015; The Agency, based on the information provided by national registries, will publish a European Register of MPs on 17 March 2015 (to be updated regularly) 1st phase of data collection commences; Trade data from Organised Market Places and transparency platform fundamental data from the ENTSOs will be reported starting on 7 October 2015
Fig. 2. The ARIS High-Level Design
Tier 1 supports the collection of trade and fundamental data. Three interfaces were defined by the Agency as communication protocol standards, namely; WebGUI, Web Service and SFTP. These allow for bidirectional communication, meaning that reporting entities send data to ACER whilst they receive feedback reports on the completeness, correctness and validity of their data. The data submission is done via XML files to ensure a harmonised, structured and consistent transfer of data to the Agency. In principle, XML schemas are defined and maintained by the Agency although certain exceptions apply when adopting existing industry schemas. Tier 2 is the systems central data warehouse. This makes it possible to logically and physically arrange the collected data, in a manner that allows ACER teams to analyse it. Moreover, it is the core component serving the data validation process.
Fig. 1. REMIT Implementation Timeline
One of the major challenges the Agency has had to face since it started its preparation activities for REMIT implementation, has been the limited information available to define complete business and technical requirements for the processes and systems to be put in place. The strategic decision taken to address this, was to define a flexible and adaptable architecture which would permit further tuning according to the gradual specification of requirements. Equally, an iterative approach was followed for development,
Tier 3 is a market monitoring software solution which plugs in
to Tier 2 and identifies abnormal trading activity and behaviour in the markets. This is mainly achieved via alerts based on economic modelling and algorithms programming. In addition, it allows the Agencys analysts to view the collected data in a user-friendly and graphical manner. Tier 4 is the data sharing system, allowing for the provision of information to relevant authorities as mentioned earlier in the text. In addition to the core ARIS modules, other systems have also been developed, such as CEREMP and the Notification Platform.
In order to support the NRAs in meeting their obligation to
provide a national register of MPs and to more efficiently centralise all information necessary for maintaining a European Register, ACER has developed and made available to NRAs the CEREMP (Centralised European Register of Energy Market Participants) system as of 16 June 2014. The vast majority of the NRAs are using the system for establishing their national register. A few NRAs have opted to use their own systems to establish national registries. These registries either connect via Web Services to establish an interface with CEREMP and automatically feed it with relevant data, or send data to ACER via batch uploads or data entries. These options are depicted in Fig. 3 below.
Attestation; the applicant attests that it has
mechanisms in place and undertakes to fulfil a list of requirements spanning from governance to technical relevance
Testing; the applicant is granted access to a
dedicated ARIS testing environment. This is a replica of the production system and is automatically tailored according to the interface(s) and data type(s) the candidate selects in the system
Provision of compliance information and
evidence; according to the category of RRM selected during registration, the applicant is requested to provide a set of information proving compliance with its corresponding requirements
The Agency launched a dedicated online Portal for REMIT
(https://www.acer-remit.eu/portal/home) on 8 January 2015. The REMIT Portal is a central, web-based portal for allowing the users community in its totality to retrieve all relevant information. This mainly consists of a public part, including information that ACER would like to publish such as the list of Organised Market Places, the List of Standard Contracts, and the European Register of MPs. It serves as the central point of access to the Agencys REMIT Information System (ARIS) applications, but also to relevant REMIT documentation. Fig. 3. CEREMP Usage Similarly, the Agency has made available the Notification Platform system to allow the reporting of suspicious transactions according to Articles 15 and 16, and also to notify on events according to Articles 3(4)(b) and 4(2) of REMIT. To ensure operational reliability, ACER believes in the necessity of having Registered Reporting Mechanisms (RRMs) reporting trade and fundamental data. The legal grounds for this are evident in Article 11 of the Implementing Regulation. For this, a relevant registration process for entities intending to become RRMs has been established, fully facilitated by a dedicated web-based system. The core steps of the process are as follows: -
Identification; provision of information on the
candidate RRM organisation and the contact person for communications by the applicant and their verification by the Agency
Non-Disclosure Declaration; the applicant electronically signs a Non-Disclosure Declaration in order to gain access to a comprehensive technical guide on reporting preparation
While ARIS is a fully integrated system, the various tiers can
operate independently of each other. This allows for continuance of operations when one or more components might experience issues. At the same time, it provides flexibility for the Agency in case due to contractual changes there has to be a major component replaced. ACER has strived for a state of the art set of technologies to be used in development, in order to create a modern, advanced and robust system. Java-based technologies are used for development and it is noteworthy that this project is one of the first worldwide to adopt and use the capabilities of Oracle 12c database. In addition, an underlying IT infrastructure composed of advanced technology equipment has already been set-up to satisfy the strict requirements on operational reliability and security.
IV. LOOKING AHEAD
Despite the difficulties encountered due to financial and human resources constraints, a lot of progress has been achieved within the past 3 years. ACER has managed to deliver in respect to its obligations and commitments. At the moment of writing this paper the Agency; -
Continues with the registration of RRMs (initiated as
of 8 January 2015)
Prepares for the first publication of the European
Register of MPs on its REMIT Portal (17 March 2015)
Has just deployed a release of ARIS which fully
covers the needs for 1st phase reporting. This includes a full data flow from Tier 1, to Tier 2 and Tier 3 for all relevant data types. This allows sufficient time for all interested parties to conduct their preparation activities and to be ready to start reporting by the indicated date (7 October 2015)
Has concluded its Pilot Project. Consisting of two
phases, the Pilot was initiated in the first half of 2013 and reached its end in February 2015. This brought important benefits in the advancement of the Agencys work, as it allowed for the development and testing of an operational prototype of ARIS by a large end-users group, primarily consisting of third parties reporting data on behalf of MPs (including, but not limited to; Organised Market Places, ENTSOs, TSOs and Trade Repositories).
Continues the development of Tier 4, which is to be
delivered in Q4 2015
Has also initiated the development work for an
additional application named Case Management Tool, dedicated to facilitate collaboration between ACER and NRAs in their common investigatory duties for cases of suspected breaches of the information disclosure obligations and of the market abuse prohibitions under REMIT. This is also planned to go-live in Q4 2015
ACER continues working hard towards the realisation of its
REMIT-related objectives, with the close engagement and involvement of its stakeholders, not only within 2015 but also beyond. The unique technical expertise and capabilities built within ACER in the specific domain has a great potential to develop EU-wide, cross-border wholesale energy market monitoring. This is also mirrored by the recent public presentation of the European Commissions Energy Union
policy, which clearly specifies the intention to review the role
of ACER and explore such reinforcement possibilities. V. BIOGRAPHY Sofronis Papageorgiou holds an MSc in Strategic Project Management and a BSc (Hons) in Computer Science. He is currently a Market Data Management Officer in the Market Monitoring Department of ACER, managing various projects within the scope of the technical implementation of REMIT. He is a certified Project Management and IT Service Management professional with international experience in the private sector as well as the European Commission (Directorate General of Informatics). He has served as a Director on the Board of Directors of PMI Luxembourg and itSMF Luxembourg and holds professional membership (MBCS) in the British Computer Society. Disclaimer the information and views expressed in this paper are those of the author and do not necessarily reflect the official position of the Agency for the Cooperation of Energy Regulators.