REMIT Reporting Services and Solutions - July 2015 updated March 2016
The trade status is generally determined in Annex I Section C of MiFID. EMIR references the same section for scoping
purposes. The most important parts of the rules are sections C6 and C7, which under MIFID read as follows:
(6) Options, futures, swaps, and any other derivative contract relating to commodities that can be physically settled
provided that they are traded on a regulated market and/or an MTF;
(7) Options, futures, swaps, forwards and any other derivative contracts relating to commodities, that can be
physically settled not otherwise mentioned in C.6 and not being for commercial purposes, which have the
characteristics of other derivative financial instruments, having regard to whether, inter alia, they are cleared and
settled through recognised clearing houses or are subject to regular margin calls;
There are many subtleties to these paragraphs, which revolve around the words “can be” and “must be” physically
settled.
Following a ruling by the FCA on behalf of ESMA in 2013, the practical upshot of the rules has been taken to mean
that physical forwards are only considered derivatives if they are executed on a venue that is considered to be a
“multilateral trading facility” (MTF), or a “regulated market” (i.e. an exchange). Following this ruling, most broker
platforms, that were until that point run as MTFs spawned a “non MTF” version, thus removing most physical
forwards from EMIR (and MiFID).
A new set of guidelines has been issued by ESMA on this topic, and it will go into effect on 7th August 2015. This
should be consulted for further guidance.
Note that spot trades are always outside of EMIR, and therefore all spot trades in gas and power are reported via
REMIT. A spot trade is generally one, which delivers or settles within two days. Again there are many details
contained within this statement that are beyond the scope of this report.
MiFID II, which comes into effect on 3rd January 2017, will change this status again, in several respects. This includes
the bringing into MiFID and EMIR of all emissions trades and certificates. Originally, emissions were part of REMIT,
but they have been removed because of this upcoming change.
Also, the new status of “OTF” (Organised Trading Facility) for many venues will require another look at which trades
fall under which rule set.
4.9 Who reports?
As outlined in section 4.1, there are several routes by which data can “get” to ACER:
1)
2)
3)
4)
5)
Via an RRM
Via an EMIR TR
Using an Organised market place
Directly, if registered as an RRM
Fundamental data – using a System Operator or RRM
Each of these will now be examined in turn:
4.9.1
RRMs
A Registered Reporting Mechanism is the key route by which data gets to ACER. Only RRMs can send data to ACER
and access the ARIS database. In effect an RRM is the “TR” of EMIR and the place to which data is sent by a market
participant. There are however some important differences:
Primarily, an RRM is merely a forwarding mechanism to ACER, whereas an EMIR TR is the ultimate destination.
Although there are retention requirements for an RRM, it purpose is to act as a “go between” market participants
and ARIS.
Copyright 2016 – ETR Advisory Ltd and Commodity Technology Advisory LLC
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