Research European Commodity Market Regulations - Part 1

European Energy Market Regulations V3.1 Bilateral reconciliation Before reconciliation starts, counterparties will need to establish procedures/systems to monitor how often they must reconcile with each entity. This may vary over time. Once established, a reconciliation schedule needs to be agreed with the other party (except for daily reconciliation). On the day of the reconciliation, the parties exchange data files. In some cases, only one party sends the file for the other to check. The fields contain the data in the key terms as well as position data. They then run matching processes, using the key terms and tolerances. If there are “breaks”, the parties communicate and fix them, or if necessary initiate the dispute resolution procedure. The matching itself can be performed by specialist software, or using a spreadsheet. Spreadsheets can be complex in this area, although the introduction of the UTI will make this task easier. The benefit of the bilateral approach is that it is simple to use, especially for those with a small number of reconciliations to perform The drawback is that any counterparty with more than a handful of reconciliations to perform will need to send a large number

Research European Commodity Market Regulations - Part 1 | Page 24