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Summaries of EU Legislation

Wholesale electricity and gas markets – EU oversight rules

 

SUMMARY OF:

Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency

WHAT IS THE AIM OF THE REGULATION?

Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency, known as REMIT, establishes a framework for monitoring European Union (EU) wholesale energy markets* and aims to prohibit abuses such as insider trading* and market manipulation*.

Regulation (EU) 2024/1106 amends the original regulation with a view to providing greater protection against market manipulation in the wholesale energy market by ensuring more transparency and increasing monitoring capacities. It seeks to reinforce the framework for fair trading practices on energy markets and thereby further improve consumer protection, in particular by ensuring that the rules against cross-border market abuses are more effectively enforced.

KEY POINTS

Regulation (EU) No 1227/2011

Agency for the Cooperation of Energy Regulators

Regulation (EU) No 1227/2011 strengthened the role of the Agency for the Cooperation of Energy Regulators (ACER), originally set up under Regulation (EC) No 713/2009, and now governed by Regulation (EU) 2019/942 (see summary). In relation to Regulation (EU) No 1227/2011, ACER’s tasks include the following.

  • Monitoring trading activities in the wholesale energy market. This is done by collecting and analysing data from market participants about their trading activities.
  • Investigating potential market abuses in selected cross-border alleged market manipulation cases.
  • Sharing information with national regulatory authorities (NRAs) so that they can take enforcement action in cases of market manipulation.

Market manipulation

The regulation seeks to prevent instances of market manipulation such as the following.

  • Placing false orders.
  • Spreading false information.
  • Giving false information to those who provide price assessments or market reports, thus misleading market participants who act on the basis of such information.
  • Claiming a different available amount of electricity generation capacity*, transmission capacity* or natural gas to that which actually exists. This has the potential to affect electricity and gas price levels.

Participants

Market participants have to:

  • register with an NRA;
  • provide ACER and the NRA with information so both bodies can monitor trading activities;
  • publicly disclose inside information* in a timely manner, including that related to the capacity and utilisation of facilities, production, storage, consumption and transmission of electricity, natural gas or liquefied natural gas (LNG).

Penalties

EU Member States must enforce penalties in the event of non-compliance with this regulation. These have to be effective, dissuasive and proportionate, and reflect:

  • the nature, duration and seriousness of the infringement;
  • the damage caused to consumers;
  • the potential trading gains from acting on inside information and market manipulation.

Amending Regulation (EU) 2024/1106

Regulation (EU) 2024/1106 introduces a number of amendments to Regulation (EU) No 1227/2011.

  • It aligns the rules on the transparency and integrity of energy markets more closely with those relating to financial markets, such as Regulation (EU) No 596/2014 (see summary), in particular as regards the definitions of market manipulation and inside information.
  • The scope of the legislation has been extended to include energy storage and LNG, and the market abuse rules also apply to financial instruments, such as energy derivatives traded on wholesale energy markets.
  • Non-EU market participants will have to designate a representative in a Member State in which they are active in the wholesale energy market. This representative must be designated by a written mandate and authorised to act on their behalf.
  • ACER will have powers to investigate cases with a cross-border dimension, where at least two Member States are affected and will work closely with the NRAs. It will have greater investigatory powers. For example, it will be able to conduct on-site inspections, request information and take statements.
  • Enforcement powers will remain at the national level, although ACER will be able to carry out its own investigations, request information and conduct interviews in cross-border cases. Where a party hinders an ACER on-site inspection or fails to provide the requested information, ACER can, under certain conditions, impose a penalty payment.
  • ACER will adopt decisions to approve the authorisations and the withdrawal of authorisations of inside information platforms (IIPs)* and registered reporting mechanisms (RRMs)*.
  • ACER will also develop and operate a platform serving as a sector-specific electronic access point for inside information that is disclosed, along with a digital reference centre of information on EU wholesale energy market data.
  • The Commission will adopt delegated acts to further specify the definition of inside information.
  • By 1 June 2027, and every 5 years thereafter, the Commission must assess the regulation’s application, in particular as regards its impact on market behaviour, market participants, liquidity, reporting requirements, including on LNG market data and the level of administrative burden for market participants, and ACER’s performance in relation to its objectives, mandate and tasks.
  • Market participants will be able to seek clarification from a contact point at ACER as to whether specific information constitutes inside information pursuant to Regulation (EU) No 1227/2011 and the relevant delegated acts adopted.

FROM WHEN DOES THE REGULATION APPLY?

Regulation (EU) No 1227/2011 has applied since 28 December 2011.

The majority of the rules introduced by amending Regulation (EU) 2024/1106 have applied since 7 May 2024.

BACKGROUND

For further information, see:

KEY TERMS

Wholesale energy markets. These are markets where energy is traded between energy producers (such as owners of power plants) and large energy users (e.g. steel plants or companies selling electricity or gas to customers).
Insider trading. When an individual attempts to benefit from trade in a certain product based on information that is not yet public (inside information). Without this information, other traders are at a disadvantage.
Market manipulation. Deliberately interfering with the fair operation of a market. This can involve creating false or misleading signals regarding the supply or demand of a certain product, thus affecting its price.
Electricity generation capacity. The capacity to produce electrical energy.
Transmission capacity. The capacity of fixed infrastructure, such as power lines, to transport electricity.
Inside information. Information related to a product that has not been made public. If it were to be made public, this could affect the price of the product in question.
Inside information platforms (IPPs). These are internet-based platforms where market participants can publish inside information. It will be mandatory to use such platforms for the disclosure of inside information.
Registered reporting mechanisms (RRMs). Entities that have the authority to submit data and transaction information to ACER on their own behalf (their own data) and/or report data of other market participants (in which case they provide a service). There are about 140 such mechanisms.

MAIN DOCUMENT

Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (OJ L 326, 8.12.2011, pp. 1–16).

Successive amendments to Regulation (EU) No 1227/2011 have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Regulation (EU) 2019/942 of the European Parliament and of the Council of 5 June 2019 establishing a European Union Agency for the Cooperation of Energy Regulators (recast) (OJ L 158, 14.6.2019, pp. 22–53).

See consolidated version.

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, pp. 1–61).

See consolidated version.

last update 14.06.2024

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