ACER and ESMA intensify their cooperation for a consistent approach towards market abuse in the wholesale energy sector
Wholesale energy markets – ESMA – ACER – Cooperation – Market Abuse – Insider trading – Market manipulation – Data collection
Prof. Dr. Régine Feltkamp
Partner MODO Advocaten
Prof. at law Free University of Brussels
The Agency for the Cooperation of Energy Regulators (ACER) and the European Securities and Markets Authority (ESMA) signed on 18 July 2013 (entry into force on the same date) a memorandum of understanding (MoU) of indefinite duration which establishes a mechanism for exchanging information when the regulatory powers of both EU bodies coincide in relation to wholesale energy markets, which encompass trading in commodity and derivatives energy products.
Under the MoU ACER and ESMA commit to cooperate with the aim of ensuring a coordinated and consistent approach to market abuse on wholesale energy markets (art. 4 MoU).
The MoU is based on several EU legislative initiatives which prescribe a co-operation for exchange of information between ACER and ESMA (/ competent authorities of Member states) and duties to provide for appropriate mechanisms in that respect (see in particular Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (‘REMIT’), Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (‘EMIR’), Directive 2003/6/EC of the European Parliament and of the Council of 28 January 2003 on insider dealing (‘MAD’) and Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC (MIFID)).
To the extent aforementioned EU legislations establish ‘complementary’ regulatory frameworks regarding a.o. market abuse, reporting and transparency related to trading of commodity and derivative energy products (see more detailed R. FELTKAMP, Insider trading and market manipulation in wholesale energy markets - The Impact of REMIT, to be published, Antwerp, Intersentia, 2013, working paper version; R. FELTKAMP & C. MUSIALSKI, "Integrity and transparency in the EU wholesale electricity market - New rules for a better functioning market?", OGEL April 2013; R. FELTKAMP, "Marktmisbruiken bij transacties in gas en elektriciteit – de REMIT-bepalingen in een vogelvlucht", Bank.Fin.R. 2012, 109-119) the cooperation aims at ensuring a coherent and consistent approach to the application of these regimes in the wholesale energy sector. Thus, the cooperation should foster consistency in e.g. the approach towards the prohibitions on insider trading and market manipulation under the REMIT and the MAD and towards data collection under the MIFID, the EMIR and the REMIT, albeit taking into account the particularities of the financial and the energy sectors.
According to the MoU the cooperation is seen to be most useful in, but is not limited to, the following matters where issues of common regulatory concern may arise (art. 3 MoU):
1) the advancement of Union legislation with regard to market abuse under the MAD and the REMIT and on data collection under the MIFID, the EMIR and the REMIT or with an impact on the overall functioning of wholesale energy markets in the Union, in particular concerning advice on legislative proposals, technical advice and recommendations to the European Commission on delegated acts and implementing acts, regulatory technical standards and implementing technical standards, and guidance, including guidelines and recommendations with a view to establishing consistent, efficient and effective regulatory practices and to ensure the common, uniform and consistent application of Union legislation;
2) the enhancement of the efficiency and effectiveness of market monitoring activities of competent authorities, including the use by competent financial authorities of various market surveillance tools (including analysis of transaction reports); and
3) the information technology (IT) governance of ACER and ESMA for data collection.
Both EU bodies committed to cooperate with the aim of ensuring a coordinated and consistent approach to market abuse on wholesale energy markets (art. 4 MoU). The MoU furthermore foresees in this respect:
1) the obligation for ACER to inform ESMA according to Article l6(3)(b) of the REMIT where it has reasonable grounds to suspect that acts are being, or have been, carried out on wholesale energy markets which constitute market abuse within the meaning of the MAD and which affect financial instruments subject to Article 9 of the MAD (art. 4 MoU);
2) the obligation for both EU bodies to nominate a list of liaison officer(s) for the purposes of the cooperation undertaken under the MoU (art. 4 MoU);
3) the obligation for ESMA to provide ACER with the relevant contact persons in the competent financial authorities in the Member States (art. 4 MoU);
4) the obligation for both EU bodies to establish efficient and effective communication channels for the proper compliance with the objectives of the MoU at all times (art. 5 MoU).
The MoU foresees also the possibility to request assistance, which must, to the extent possible, be based on a written request (art. 6 MoU). To the extent permitted by Union legislation, ACER respectively ESMA must, when receiving such a request, take all reasonable steps to obtain and provide the assistance sought (art. 7 MoU).
Use of data - data protection - secrecy
Subject to any restrictions in Union law, ACER and ESMA may use non-public information obtained from each other under the MoU for the purpose of their regulatory responsibilities under applicable Union legislation (art. 8 MoU). In cases where ACER or ESMA would like to use information obtained under the MoU for enforcement purposes, including in conducting investigations or bringing administrative proceedings, prior consent must be sought from each other.
The MoU is without prejudice to the obligations incumbent on ACER and ESMA in respect of the processing of personal data pursuant to Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (art. 9).
Any confidential information received, exchanged or transmitted is also subject to the conditions of professional secrecy laid down in Article 17 of the REMIT and Article 70 of the Regulation (EU) No1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC and other applicable Union legislation. Information shared between ACER and ESMA, within the scope of the MoU, must be used exclusively by ACER and ESMA for the purposes of exercising their respective regulatory responsibilities within the boundaries of their functions under Union law (art. 10).
ESMA and ACER communicated their intention to cooperation primarily through on-going consultations, exchange of information and mutual participation in meetings of ACER and ESMA working groups and task forces (see the common press release).