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Welcome to 2016

Today is the first working day of 2016, which promises to see a great deal of regulatory activity that market participants need to be aware of and prepare for. Here we will consider some highlights:

Data Reporting
We are now just over 3 months away from “Phase 2” of REMIT reporting, which requires all off venue gas and power activity to be reporting to ACER either via an RRM or directly. Unlike the first phase there is no option to simply sign a data reporting agreement with an Organised Market Place. For most there is a great deal to do to be ready, and Q1 will be a very busy time.

Later this year we are likely to see changes in EMIR reporting, brought about by the proposed new Regulatory Technical Standard. FinFrag will also keep those in the Swiss region busy.

Surveillance and Monitoring
With REMIT reporting in place, National Regulatory Authorities (NRAs) should be in a position to fully monitor the gas and power market for market manipulation. Recent cases have shown that this responsibility is being taken seriously and we can therefore expect many to step up their monitoring processes and technology from Q2, once the reporting deadline passes.

Those in other commodities will need to comply with the Market Abuse regulation (MAR) which comes into force mid year. The requirements to monitor here are wider than for REMIT.

Clearing, margining capital management and more
The next weeks are likely to see some movement in the finalisation of the rules around ancillary activity and position limits under MiFID II. This, combined with the likely delay by a year, should finally kick off concentrated activity in order to prepare for MiFID II. Some will lose their exemptions under this process and need to comply with the”full MiFID”. Others will need to perform the calculation and comply with position limits. In either case the process should not be ignored or left too late. There are many consequences to becoming a “MiFID” company including becoming a “Financial Counterparty” under EMIR

The latter half of the year may also see the loss of hedge exemption under EMIR. This could see those who remain outside of MiFID still becoming an “NFC+” with its consequent clearing obligation under EMIR, which this year will start for FCs in certain instruments.

We can expect activity in this area to increase steadily over the year.

 

Keeping Track
The amount of information around regulation will only continue to grow. It is vital to keep track of what is important, in order to maximise time for preparation.

This blog will endeavour to support this, by bringing readers useful information as it arises. It promises to be a busy 2016!

 

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on the regulation of the commodity, energy and financial markets. He has more than 23 years of experience in the financial, energy and commodity markets, covering regulatory compliance, credit, risk and financial technology. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy and Commodity Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

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