ACER yesterday issued this guidance note which provides a detailed examination of scenarios that are considered to be “wash trades” and therefore illegal under REMIT. The document looks at different scenarios which are considered wash trades, spanning one or more parties, thus also covering “pre-arranged trading” and “circular trading”. It provides guidance as to when activity could be illegal, and also provides some recommendations as to how to monitor for such breaches of the rules. The 4th edition of the REMIT Guidance has also been updated (see here).
The document makes clear that in addition to intentional and attempted intentional manipulation, unintended misleading price signals are also potentially breaches of Article 5 of REMIT.
The energy and commodities markets have been paying an increased amount of attention to “anti abuse” issues over the last year. This is due both to the requirement under MAR for many to monitor their activities(see here), and also due to an increased focus of National Regulatory Authorities on possible breaches of REMIT (see here). In addition, the collection of data under REMIT and the ongoing efforts to make the data usable for surveillance means that NRAs will be watching the market more closely (see here).
There is a great deal of detail in the document. Those who wish to have a further discussion on the contents are welcome to contact ETR Advisory via this link.