Research European Commodity Market Regulations - Part 2 | Page 12

European Energy Market Regulations – Survey Results

Analysis and Discussion
Despite almost 6-months of pushing to gain responses to the survey, response rates remained low.
Discussions with others across the industry suggeste that this is a common phenomena around
surveys related to regulatory preparedness and perhaps indicates an unwillingness to provide details
on the issue of preparedness. It may be the level of unpreparedness that has kept response rates
down.
Frankly, the level of preparedness is low considering that these regulations have been in planning
(and have been frontpage news) for several years and EMIR is already in force. However, it is true
that implementation dates have slipped and details regarding implementation have been slow to
emerge and in some instances still remain unclear. Perhaps some beleive that as a result, the
regulations will never be properly implemented? Certainly, there appears to be a general lack of
urgency around the issue.
According to our sample, only 65% are aware of the regulations. Again, given the amount of
coverage of the regulations in the media and the industry, this seems surprising. Furthermore, less
than half the respondents have an action plan to deal with the regulations and just over a third of
respondents have a plan that crosses IT and business boundaries.
EMIR is already in force but only around half of the respondents can calculate where they sit with
respect to the threshold and almost 1 in 10 cannot perform the calculation. Around 40% are in
compliance with the new trade confirmation requirements but only 4 respondents felt they could
comply with the new stricter requirements coming in.
We observe similar results when it comes to other aspects of EMIR such as portfolio compression
and portfolio optimization and risk management. Data reporting appears to be the only area of EMIR
(and possibly REMIT) where respondents have made a start. Here, more than 80% of those that
answered the relevant questions have made some progress. In other areas such as REMIT
requirements and the potential requirements around MiFiD2 there is a great deal of uncertainty and
not much preparedness.
The overwhelming conclusion of the survey must be that the industry has yet to properly prepare in
many quarters for these regulations. In fact, an additional observation is that while vendors and
service providers seem to have invested in developing new solutions (reporting, threshold
calculations, trade surveillance tools and so on), they too have yet to see the interest levels that they
originally may have expected.
Overall, the data gathered via this survey and others that we are familiar with seems to suggest that
around a third of the industry consider themselves prepared and ready for the regulations, a third
are in progress with preparations and a third haven’t yet started. Another private ComTech Advisory
survey for example, asked a question about readiness for EMIR and REMIT and found similar results
(Figure 9).

© Commodity Technology Advisory LLC and ETR Advisory Ltd, 2013, All Rights Reserved.

December, 2013

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