As a player in the wholesale energy markets, it is vital that you familiarize yourself with the requirements of the REMIT provisions by the European Union (EU 1227/2011). This deals with the wholesale energy market with respect to preserving transparency and integrity. This provisions are enforced by the European Court of Justice and are part of the broader trade surveillance and insider trading control mechanisms that you should put in place to comply with the law and also instil confidence in the market. There are several issues pertaining to REMIT requirements and REMIT energy that need to be researched on and discussed at length but in this article we are going to mainly focus on some of the commonly asked questions regarding these provisions.
What is REMIT?
These are provisions that resulted from the European Parliament and 25 October 2011 Council. They were made public in the Journal of the European Union on the 8th of December the same year. This has resulted in the establishment of a uniform framework that is applicable EU-wide.
What it does is:
Define market abuse in light of market manipulation, attempted market manipulation and insider trading within the wholesale energy markets.
Bar the manipulation and attempted manipulation of the market as well as insider trading within these markets.
Put in place a framework that enables the monitoring of these energy markets. They also detect and deter act of insider trading and market manipulation.
Establish the enforcement and sanctioning of breaches associated with the established provisions.
Why Is There Need For An EU-Wide Framework?
Energy markets across Europe are more linked than ever before. This means that an incident of insider trading or market manipulation in one of these markets can have a ripple effect in all the European wholesale energy markets. This is what necessitates a bloc-wide framework that 9ensures the integrity of the markets and not leave individual countries to their vices. This minimises price distortions and preserves the confidence invested in the market.
The overall benefit of having such a stable environment is that demand and supply forces are correctly interpreted and producers and consumers can make the right decisions.
What Is Covered By REMIT?
REMIT covers the entirety of the wholesale energy market. This includes any contracts for the supply of electricity or natural gas in which the delivery occurs on the European Union. It also relates to any contracts covering the transportation of energy within the Union.