Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on energy market integrity and transparency
Date: 2010-12-08
Institutions: European Commission
Subjects: energy policy, energy production, energy saving, energy supply, security of supply, thermal energy

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EUROPEAN COMMISSION 

Brussels, 8.12.2010 
COM(2010) 726 final 

2010/0363 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on energy market integrity and transparency 

{SEC(2010) 1510 final} 
{SEC(2010) 1511 final} 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

A  positive  outcome  of  a  decade  of  electricity  and  gas  market  liberalization  has  been  the 
development  of  power  exchanges  and  standardized  over  the  counter  (OTC)  contracts  which 
attract  a  wide  range  of  actors  including  generators  and  suppliers,  large  energy  users,  pure 
traders, financial institutions and other trade facilitators.  

Competitive and integrated European energy markets support innovation and efficiency. Deep 
and liquid wholesale gas and electricity markets give confidence to businesses that they can 
respond flexibly to changes in market conditions – supporting investment in new generation 
and infrastructure, which are needed as part of the transformation of Europe's energy supply. 
Prices on wholesale markets also determine energy costs for households and business. 

Therefore  citizens,  business  and  authorities  must  have  confidence  in  the  integrity  of  these 
wholesale  energy  markets.  Unless  effectively  addressed,  the  potential  for  unfair  trading 
practice undermines public trust, deters investment, increases volatility of energy prices and 
may lead to higher energy prices in general.  

In  December  2007,  the  Commission  requested  the  advice  of  Committee  of  European 
Securities  Regulators  (CESR)  and  the  European  Regulators  Group  for  Electricity  and  Gas 
(ERGEG) on issues relating to wholesale energy market transparency and market abuse. Their 
response was that the Commission should consider developing and evaluating proposals for a 
basic  tailor  made  market  abuse  framework  in  the  energy  sector  legislation  for  all  electricity 
and  gas  products  not  covered  by  the  Market  Abuse  Directive1.  This  advice  followed  from 
their findings that the existing regime has led to gaps in the applicable rules and the level of 
transparency.  

2. 

CONSULTATION OF INTERESTED PARTIES 

In May 2009 the Directorate General for Energy (then DG TREN) organised a workshop to 
collect stakeholders' views and discuss the best way to develop a monitoring regime to ensure 
market  integrity  and  transparency  on  energy  markets.  A  second  workshop  was  organised  in 
October  2009  with  wide  industry  participation  and  presented  the  basic  building  blocks  of  a 
sector specific market integrity regime.  

The Directorate General for Energy presented a draft discussion paper2 at the December 2009 
European  Electricity  Regulatory  Forum  (the  Florence  Forum)  and  in  January  2010  at  the 
European  Gas  Regulatory  Forum  (the  Madrid  Forum).  Stakeholders  were  asked  to  submit 
their  proposals  and  views  on  the  presented  policy  options  by  February  2010.  A  full  public 
consultation was organised from 31 May 2010 to 23 July 2010.  

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CESR  and  ERGEG  advice  to  the  European  Commission  in  the  context  of  the  Third Energy  Package, 
three  separate  documents  (Ref:  CESR/08-527,  CESR/08-998,  CESR/08-739)  presented  to  the 
Commission between October 2008 and January 2009. 
http://ec.europa.eu/energy/gas_electricity/forum_electricity_florence_en.htm  

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All  information  on  the  consultation  process,  the  documents  and  presentations  used  in  the 
stakeholder meetings have been made available on the website of DG ENER3. 

3. 

IMPACT ASSESSMENT 

This  proposal  is  accompanied  by  an  Impact  Assessment  which  examines  the  options  for 
ensuring  energy  market  integrity  and  transparency  in  detail.  The  Impact  Assessment  Report 
has been made available on the Commission website4.  

4. 

LEGAL ELEMENTS OF THE PROPOSALS 

4.1. 

Legal basis 

The proposal is based on Article 194(2) TFEU. This Article states that in the context of the 
establishment and functioning of the internal market Union policy on energy shall aim, inter 
alia, to ensure the functioning of the energy market and is therefore the most appropriate legal 
basis for a Regulation in this field. 

A Regulation is the most appropriate legal instrument to establish consistent rules applying to 
cross  border  energy  markets,  with  a  European  level  monitoring  function  and  coordinated 
enforcement across the Member States.  

4.2. 

Subsidiarity and proportionality 

4.2.1. 

Subsidiarity principle 

The subsidiarity principle as set out in Article 3(3) of the Treaty on European Union, applies 
insofar as the proposal does not fall under the exclusive competence of the Union. 

Wholesale  energy  markets  are  crucial  to  the  well  being  of  Europe's  citizens,  and  to  the 
competitiveness of Europe's businesses, as well as to the success of the EU's energy policy. 
As made clear in their advice to the Commission, financial regulators and energy regulators 
cannot  effectively  address  concerns  regarding  market  abuse  because  of  a  combination  of 
informational failures and incomplete regulation.  

EU  energy  markets  increasingly  cross  national  boundaries  in  terms  of  where  trading  takes 
place and where production and consumption takes place. As a result prices are set based on 
supply and demand in several countries5. Market coupling between power exchanges across 
EU6, which is envisaged to be in place by 2015, will reinforce this, as will the move to hub 
based trading in gas along with entry/exit gas transmission tariffs. 

Furthermore  wholesale  energy  markets  include  organised  exchanges  and  brokered  over-the-
counter  (OTC)  deals.  OTC  transactions  in  particular  are  frequently  concluded  outside  the 

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http://ec.europa.eu/energy/gas_electricity/consultations/2010_07_23_energy_markets_en.htm 
http://ec.europa.eu/governance/impact/index_en.htm  
This is supported by the high correlation between prices of neighbouring countries, for example Dutch-
German electricity day ahead price correlation increased from 0.57 (2004) and 0.67 (2005) to 0.85 and 
0.91 in 2008 and 2009, respectively. This is analysed in more detail in the impact assessment report. 
Presentation  to  Florence  Forum  "Target  Model  for  Interregional  Congestion  Management",  10 
December 2009, http://ec.europa.eu/energy/gas_electricity/forum_electricity_florence_en.htm  

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country to which the trades relate. Such deals also influence trading on power exchanges. It is 
evident  that  market  abuses  occuring  on  a  specific  market  will  not  be  confined  to  a  single 
Member  State  but  will  inevitably  have  impacts  across  the  European  Union,  just  as  anti-
competitive  behaviour  on  energy  markets  could  have  an  effects  on  trade  between  Member 
States and can affect customers across the internal market 7.  

Therefore consistent rules across the internal market are needed along with a mechanism for 
authorities  to  access  information  from  across  the  Union  to  fully  understand  market 
developments. 

There  are  attempts  at  the  national  level to  implement  monitoring  of  energy  markets8.  Given 
the organisation of energy markets, it will be difficult for individual member states to access 
the necessary range of data to ensure that market abuse is effectively detected and deterred. 
Without  action  at  the  EU  level  these  initiatives  could  proliferate  and  risk  exposing  market 
participants to conflicting and uncoordinated regimes. 

Because of the cross-border nature of the problem, it is clear that EU action has a key role to 
play in ensuring the integrity of European energy markets. EU wide coordination can ensure 
that the benefits of the internal market in energy are not lost as a result of market behaviour 
which  undermines  the  confidence  of  citizens  and  business  in  the  price  formation  process, 
when the behaviour occurs in a different Member State to where its effects are felt.  

The Regulation will create a framework which defines rules that are consistent and adapted to 
the specifics of energy markets and designed to effectively detect and deter market abuse. It 
foresees the Agency for the Cooperation of Energy Regulators (the Agency)9 working closely 
with the national regulatory authorities established under Directive 2009/72/EC and Directive 
2009/73/EC and with other competent authorities to monitor electricity, and gas markets, and 
to ensure that effective and coordinated enforcement action is taken.  

Member State authorities not only have a direct interest in the outcomes on their markets, they 
also  bring  an  important  understanding  of  the  evolution  of  market  outcomes  in  their 
jurisdiction.  Therefore  respecting  the  subsidarity  principle  will  be  key  to  ensuring  the 
effectiveness of EU action. This Regulation will facilitate a more efficient monitoring at the 
national  level,  by  giving  national  level  authorities  access  to  comprehensive  data,  and  also 
ensure  that  the  Agency  brings  the  appropriate  Europe-wide  view  of  electricity  and  gas 
markets, and the necessary expertise in the operation of European electricity and gas markets 
and systems. 

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Inquiry into the functioning of gas and electricity markets of 2005, pursuant to Article 17 of Regulation 
1/2003 EC - http://ec.europa.eu/competition/sectors/energy/inquiry/index.html#final - and Commission 
Decision  of  28.11.2008  relating  to  cases  COMP/39.388  –  German  Electricity  Wholesale  Market  and 
COMP/39.389 – German Electricity Balancing Market 
The French energy regulator (CRE) has broad powers to oversee wholesale markets (including spot and 
OTC  derivative  transactions)  and  has  begun  to  request  transactional  data  relating  to  French  markets 
from  market  participants  across  Europe.  The  German  Monopolkommission  has  demanded  the 
establishment of an independent market monitor in Germany being able to access on and off-exchange 
transactions for delivery in Germany. In March 2009 Ofgem, the UK energy regulator issued a paper on 
preventing market abuse. 
The Agency was established under Regulation (EC) No. 713/2009 of the European Council and of the 
parliament  establishing  an  Agency  for  the  Cooperation  of  Energy  Regulators,  whose  legal  basis  was 
then article 95 of the Treaty. The Agency furthers the objectives of Article 194 of the Treaty. Had this 
Article  been  in  force  when  Regulation  (EC)  No.  713  was  adopted,  it  would  have  provided  the  legal 
basis for the establishment of the Agency. 

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4.2.2.  Proportionality principle 

In accordance with the principle of proportionality, as set out in Article 3(4) of the Treaty on 
European  Union,  the  proposal  does  not  go  beyond  what  is  necessary,  in  particular  in  its 
impact  on  those  who  trade  in  whoesale  energy  products,  in  order  to  achieve  the  intended 
objective of ensuring the functioing of the internal market in energy by ensuring the intergrity 
and transparency of wholesale energy markets.  

4.3. 

Detailed explanation 

4.3.1.  Clear and consistent rules 

The Regulation develops rules which clearly prohibit market abuse on wholesale markets in 
electricity  and  related  products,  and  wholesale  markets  in  natural  gas  and  related  products. 
These  rules  include  clear  prohibitions  on  trading  on  insider  information,  and  market 
manipulation.  These  rules  are  formulated  in  such  a  way  that  they  are  consistent  with  the 
Market Abuse Directive, and do not apply to financial instruments which are already covered 
by that Directive. 

As  a  result  the  gaps  identified  by  CESR  and  ERGEG  will  be  filled,  with  market  abuse 
explicitly prohibited on wholesale energy markets. 

4.3.2.  Adaptable and compatible rules 

The  Regulation  allows  these  rules  to  be  specified  in  delegated  acts  of  the  Commission. 
Industry  responses  to  the  public  consultation  favoured  this  approach,  which  allows  the 
specificities of energy markets, which are subject to change, to be taken into account. Here it 
is  relevant  that  the  adoption  of  network  codes  under  Third  Energy  Liberalisation  Package 
legislation will bring many changes to the way in which cross border markets operate. This 
approach  will  allow  financial  regulators  to  take  account  of  such  detailed  regulations  in  the 
application of the Market Abuse Directive (MAD) to financial instruments related to energy. 

4.3.3.  Measures for effective detection and deterrence 

Market monitoring  

To  detect  market  abuse  an  effectively  functioning  market  monitor  with  timely  access  to 
complete  transactional  data  is  necessary.  EU  level  market  monitoring  can  take  the  holistic 
view needed for the monitoring of energy markets. The Agency for the Cooperation of Energy 
Regulators  (the  Agency)  has  the  necessary  expertise  in  energy  markets,  and  institutional 
connections with national energy regulators for this role. 

The  Regulation  provides  for  the  Agency  to  gather,  review  and  share  data  from  wholesale 
energy markets. Member State authorities, including national regulatory authorities, financial 
regulators and competition authorities, have a direct interest in the market results and bring a 
vital  understanding  of  the  markets  in  their  jurisdiction.  Therefore  cooperation  between  the 
Agency and national authorities is central to the monitoring foreseen. 

Data Reporting 

The  Regulation  requires  market  participants  to  provide  the  Agency  with  a  record  of  their 
transactions in wholesale energy products. The form, content and timing of the information to 

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be provided will be laid down in delegated acts of the Commission. These will be based on 
draft guidelines developed by the Agency. These guidelines will provide for several channels 
for  the  reporting  of  data.  This  will  minimise  the  burden  on  market  participants  and  avoid 
double reporting obligations on entities covered by the Market Abuse Directive. 

Investigation and Enforcement  

Market  monitoring  will  be  accompanied  by  effective  investigation  where  market  abuse  is 
suspected,  where  necessary  leading  to  appropriate  sanctions.  The  Regulation  gives  national 
regulatory  authorities  the  lead  role  in  this,  requiring  Member  States  to  grant  them  the 
necessary powers to investigate suspected market abuse and to lay down appropriate rules on 
the penalties applicable in case of violations of the Regulation. 

The  Regulation  also  recognises  that  the  cross  border  nature  of  energy  markets  means  that 
cooperation  will  be  crucial.  In  this  ACER  is  given  an  important  role.  In  close  contact  with 
energy regulators and financial supervisors it will ensure that a consistent approach is taken to 
suspected market abuse, alerting national regulatory authorities to potential market abuse and 
facilitating information exchange. 

This  coordination  role  will  be  particularly  important  when  an  investigation  covers  several 
Member  States  or  it  is  unclear  where  the  suspected  market  abuse  actually  occurred.  The 
Regulation  provides  for  the  possibility  for  an  investigatory  group  to  be  established, 
coordinated by the Agency but made up of representatives  of concerned national  regulatory 
authorities.  

5. 

BUDGETARY IMPLICATIONS 

An overview of the implication of this proposal is presented in the accompanying legislative 
financial statement.  

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2010/xxxx (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on energy market integrity and transparency 

(Text with EEA relevance) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  Functioning  of  the  European  Union,  and  in  particular 
Article 194(2) thereof, 

Having regard to the proposal from the Commission10, 

After transmission of the draft legislative act to the national Parliaments, 

Having regard to the opinion of the European Economic and Social Committee11, 

Having regard to the opinion of the Committee of the Regions12, 

Acting in accordance with the ordinary legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

It  is  important  to  ensure  that  consumers  can  have  confidence  in  the  integrity  of 
electricity  and  gas  markets  and  that  prices  set  on  wholesale  energy  markets  reflect  a 
fair interplay between supply and demand. 

The  advice  of  the  Committee  of  European  Securities  Regulators  and  the  European 
Regulators  Group  for  Electricity  and  Gas  confirmed  that  the  scope  of  existing 
legislation may not properly address market integrity issues on the electricity and gas 
markets and recommended the consideration of an appropriate legislative framework 
in the energy sector, preventing market abuse. 

Energy  markets  are  increasingly  interlinked  across  the  Union.  Market  abuse  in  one 
Member State affects wholesale prices for electricity and gas across national borders. 
Therefore  the  concern  to  ensure  the  integrity  of  markets  cannot  be  a  matter  only  for 
individual Member States.  

(4)  Wholesale  energy  markets  encompass  both  commodity  markets  and  derivative 

markets, with price formation in both sectors interlinked. 

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OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 

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(5) 

(6) 

(7) 

(8) 

To  date  energy  market  monitoring  practices  have  been  Member  State  and  sector 
specific. Depending on the overall market framework and regulatory situation, this can 
result  in  trading  activities  being  subject  to  multiple  jurisdictions  with  monitoring 
carried  out  by  several  different  authorities,  possibly  located  in  different  Member 
States. This can result in a lack of clarity as to where responsibility rests and even to a 
situation where no such monitoring exists. 

Behaviour which undermines the integrity of the energy market is currently not clearly 
prohibited on some of the most important energy markets. 

Derivative  trading  and  commodity  trading  are  used  together  on  wholesale  energy 
markets. It is therefore important that the definitions of market abuse, which consists 
of  insider  trading  and  market  manipulation,  are  compatible  between  derivatives  and 
commodity markets. 

Regulation  (EC)  No  714/2009  of  the  European  Parliament  and  of  the  Council  of  13 
July  2009  on  conditions  for  access  to  the  network  for  cross-border  exchanges  in 
electricity13 and Regulation (EC) No 715/2009 of the European Parliament and of the 
Council  of  13  July  2009  on  conditions  for  access  to  the  natural  gas  transmission 
networks14  recognise  that  equal  access  to  information  on  the  physical  status  and 
efficiency  of  the  system  is  necessary  to  enable  all  market  participants  to  assess  the 
overall  demand  and  supply  situation  and  identify  the  reasons  for  changes  in  the 
wholesale price. 

(9) 

It should be clearly prohibited to use or to attempt to use inside information to trade 
either  on  one's  own  account  or  on  the  account  of  a  third  party.  Use  of  inside 
information can also consist in trading in wholesale energy products by persons who 
know, or ought to know, that the information they possess is inside information. 

(10)  Manipulation on wholesale energy markets involves artificially causing prices to be at 
a  level  not  justified  by  the  actual  availability  and  costs  of  production,  storage  or 
transportation capacity and demand. 

(11)  Specification  of  the  definitions  of  inside  information  and  market  manipulation  is 
necessary  to  account  for  the  specificities  of  wholesale  energy  markets,  which  are 
dynamic  and  subject  to  change.  The  Commission  should  be  empowered  to  adopt 
delegated acts in accordance with Article 290 of the Treaty in respect to such detailed 
rules. 

(12)  Regulation  (EC)  No  713/2009  of  the  European  Council  and  of  the  parliament 
establishing  an  Agency  for  the  Cooperation  of  Energy  Regulators15  furthers  the 
objectives of Article 194 of the Treaty. Had this Article been in force when Regulation 
(EC) No 713 was adopted, it would have provided the legal basis for the establishment 
of the Agency for the Cooperation of Energy Regulators (the Agency). 

(13)  Efficient  market  monitoring  is  vital  to  detecting  and  deterring  market  abuse  on 
wholesale energy markets. The Agency is best placed to carry out such monitoring as 

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OJ L 211, 14.8.2009, p. 15. 
OJ L 211, 14.8.2009, p. 36. 
OJ L 211, 14.8.2009, p. 1. 

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it  has  both  a  Union  wide  view  of  electricity  and  gas  markets,  and  the  necessary 
expertise  in  the  operation  of  electricity  and  gas  markets  and  systems  in  the  Union. 
National regulatory authorities having an important understanding of developments on 
energy  markets  in  their  Member  State  should  have  an  important  role  in  ensuring 
efficient market monitoring. 

(14)  Efficient market monitoring requires regular access to records of transactions. For this 
reason market participants who trade wholesale energy products should be required to 
provide this information to the Agency.(15) In order to ensure the necessary flexibility 
in  collecting  information  on  transactions  in  wholesale  energy  products,  the 
Commission should be empowered to adopt delegated acts in accordance with Article 
290  of  the  Treaty  setting  out  the  timing,  form  and  content  of  the  information  which 
market  participant  are  required  to  provide.  Reporting  obligations  should  not  create 
unnecessary  costs  for  market  participants.  Persons  reporting  transactions  to  a 
competent authority in accordance with the provisions of Directive 2004/39/EC of the 
European  Parliament  and  of  the  Council  of  21  April  2004  on  markets  in  financial 
instruments16,  and  to trade  repositories  and competent authorities in accordance with 
the provisions of Regulation ../.. of the European Parliament and the Council on OTC 
derivatives,  central  counterparties  and  trade  repositories  should  therefore  not  be 
subject to additional reporting obligations under this Regulation.  

(16) 

In order to facilitate efficient monitoring of all aspects of trading in wholesale energy 
products,  the  Agency  should  establish  mechanisms  to  give  access  to  the  information 
which  it  receives  on  transactions  on  wholesale  energy  markets  to  other  relevant 
authorities,  in  particular  to  the  European  Securities  and  Markets  Authority  (ESMA) 
established by Regulation (EU) ---/---- of the European parliament and of the Council 
establishing  a  European  Securities  and  Markets  Authority  [ESMA  regulation  – 
Commission  proposal  2009/0144  (COD)]  national  regulatory  authorities,  competent 
financial  authorities  of  the  Member  States,  competition  authorities  of  the  Member 
States and other relevant authorities.  

(17)  The  Agency  should  ensure  the  operational  security  of  the  data  which  it  receives, 
prevent  unauthorised  access  to  the  information  kept  by  the  Agency,  and  establish 
procedures  to  ensure  that  the  data  it  collects  are  not  misused  by  persons  with  an 
authorised  access  to  them.  The  Agency  should  also  be  assured  that  those  authorities 
who have access to the data held by Agency will be able to maintain an equally high 
level of security. 

(18)  Where information is not commercially sensitive, the Agency should be able to make 
that  information  available  to  market  participants  and  the  wider  public.  Such 
transparency  can  help  build  confidence  in  the  market  and  help  the  development  of 
knowledge about the functioning of wholesale energy markets. 

(19)  National regulatory authorities should be responsible for ensuring that this Regulation 
is  enforced  in  the  Member  States.  To  this  end  they  should  have  the  necessary 
investigatory powers to allow them to carry out this task efficiently. 

(20)  The  Agency  should  ensure  that  the  application  of  this  Regulation  is  done  in  a 
coordinated  way  across  the  Union,  and  is  coherent  with  the  application  of  Directive 

16 

OJ L 145, 30.04.2004, P. 0001 - 0044 

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2003/6/EC  of  the  European  Parliament  and  of  the  Council  of  28  January  2003  on 
insider  dealing  and  market  manipulation  (market  abuse)17.  Since  market  abuse  on 
wholesale  energy  markets  often  affects  more  than  one  Member  State,  the  Agency 
should  have  an  important  role  in  ensuring  that  investigations  are  carried  out  in  an 
efficient  and  coherent  way.  To  achieve  this  it  should  be  able  to  coordinate  the 
operation  of  investigatory  groups  comprised  of  representatives  of  the  concerned 
national regulatory authorities, and where appropriate, other authorities.  

(21)  National regulatory authorities and competent financial authorities should cooperate to 
ensure a coordinated approach to tackling market abuse on wholesale energy markets 
which encompasses both commodity markets and derivatives markets.  

(22) 

(23) 

It is important that the obligation of professional secrecy applies to those who receive 
confidential information in accordance with the provisions of this Regulation.  

It is important that the penalties for breaches of this Regulation are proportionate and 
dissuasive,  and  reflect  the  gravity  of  the  infringements  and  the  potential  gains  from 
trading  on  the  basis  of  inside  information  and  market  manipulation.  Recognising  the 
interactions  between  trading  in  electricity  and  gas  derivative  products  and  trading  in 
actual  electricity  and  gas,  the  penalties  for  breaches  of  this  Regulation  should  be  in 
line  with  the  penalties  adopted  by  the  Member  States  in  implementing  Directive 
2003/6/EC. 

(24)  Since  the  objective  of  this  Regulation,  namely  the  provision  of  a  harmonised 
framework to ensure energy market transparency and integrity, cannot be sufficiently 
achieved by the Member States and can be better achieved at Union level, the Union 
may  adopt  measures,  in  accordance  with  the  principle  of  subsidiarity  as  set  out  in 
Article  5  of  the  Treaty  on  European  Union.  In  accordance  with  the  principle  of 
proportionality, as set out in that Article, this Regulation does not go beyond what is 
necessary in order to achieve that objective, 

HAVE ADOPTED THIS REGULATION: 

Article 1 

Subject matter, scope and relationship with other Union legislation 

This Regulation establishes rules prohibiting abusive practices on wholesale energy markets 
coherent with those applying in financial markets. It provides for the monitoring of wholesale 
energy markets by the Agency. 

This Regulation applies to trading in wholesale energy products. The provisions of Article 3 
and  Article  4  shall  not  apply  to  wholesale  energy  products  which  are  financial  instruments 
and  to  which  the  provisions  of  Article  9  of  Directive  2003/6/EC  apply.  This  Regulation  is 
without prejudice to Directive 2003/6/EC and 2004/39/EC as well as to the application of the 
provisions of European competition law to the practices covered by this Regulation. 

17 

OJ L 96, 12.4.2003, p. 16. 

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The  Agency,  national  regulatory  authorities  and  competent  financial  authorities  shall 
cooperate  to  ensure  that  a  coordinated  approach  is  taken  to  the  enforcement  of  the  relevant 
rules  where  actions  relate  to  one  or  more  financial  instruments  to  which  the  provisions  of 
Article 9 of Directive 2003/6/EC apply and also to one or more wholesale energy products to 
which the provisions of Article 3 and Article 4 apply. 

Article 2 

Definitions  

For the purposes of this Regulation the following definitions shall apply: 

1. 

"inside  information"  means  precise  information  which  has  not  been  made  public, 
relating directly or indirectly to one or more wholesale energy products and which, if 
it  were  made  public,  could  significantly  affect  the  prices  of  such  wholesale  energy 
products;  

For the purposes of applying the first subparagraph, information a reasonable market 
participant would be likely to use as part of the basis of his decision to enter into a 
transaction  relating  to  a  wholesale  energy  product  is  information  which,  if  it  were 
made  public,  would  be  likely  to  have  a  significant  effect  on  the  prices  of  such 
wholesale  energy  products.  Such  information  includes  information  related  to  the 
capacity  of  facilities  for  production,  storage,  consumption  or  transmission  of 
electricity or natural gas, as well as information which is required to be disclosed in 
accordance  with  legal  or  regulatory  provisions  at  Union  or  national  level,  market 
rules, and contracts or customs on the relevant wholesale energy market. 

By way of example, information which is required to be made public in accordance 
with  the  provisions  of  Regulation  (EC)  No.  714/2009  or  Regulation  (EC)  No. 
715/2009,  including  guidelines  and  network  codes  adopted  pursuant  to  those 
Regulations, can constitute inside information. 

2. 

Market manipulation means:  

(a) 

entering into transactions or the issuing of orders to trade in wholesale 
energy products, which: 

– 

– 

give, or are likely to give, false or misleading signals as to the 
supply  of,  demand  for  or  price  of  wholesale  energy  products; 
or 

secure or attempt to secure, by a person or by persons acting in 
collaboration,  the  price  of  one  or  several  wholesale  energy 
products  at  an  abnormal  or  artificial  level,  unless  the  person 
who entered into the transactions or issued the orders to trade 
establishes that his reasons for doing so are legitimate and that 
these  transactions  or  orders  to  trade  conform  to  accepted 
market practices on the wholesale energy market concerned; or  

– 

employ  or  attempt  to  employ  fictitious  devices  or  any  other 
form of deception or contrivance; 

EN 

11 

   EN 

(b) 

dissemination of information which gives, or is likely to give, false or 
misleading  signals  as  to  wholesale  energy  products,  including  the 
dissemination  of  rumours  and  false  or  misleading  news,  where  the 
person  who  made  the  dissemination  knew,  or  ought  to  have  known, 
that the information was false or misleading. In respect of journalists 
when  they  act  in  their  professional  capacity  such  dissemination  of 
information is to be assessed taking into account the rules governing 
their profession, unless those persons derive, directly or indirectly, an 
advantage  or  profits  from  the  dissemination  of  the  information  in 
question. 

By  way  of  example,  making  it  appear  that  the  availability  of  electricity  generation 
capacity or gas availability, or the availability of transmission capacity is other that 
the capacity which is actually physically available constitutes market manipulation. 

3. 

"attempt to manipulate the market" means: 

(a) 

entering  into  a  transaction,  placing  an  order  to  trade  or  taking  any 
other action relating to a wholesale energy product with the intention 
of: 

– 

– 

– 

giving false or misleading signals as to the supply of, demand 
for or price of wholesale energy products;  

securing the price of one or several wholesale energy products 
at an abnormal or artificial level; or  

employing a fictitious device or any other form of deception or 
connivance relating to a wholesale energy product  

(b) 

disseminating  information  through  the  media,  including  the  Internet, 
or  any  other  means  with  the  intention  of  giving  false  or  misleading 
signals as to wholesale energy products. 

4. 

"wholesale  energy  products"  means  the  following  contracts  and  derivatives, 
irrespective of where and how they are traded: 

(a) 

(b) 

(c) 

(d) 

contracts for the supply of natural gas or electricity;  

derivatives relating to natural gas or electricity; 

contracts relating to the transportation of natural gas or electricity; 

derivatives relating to the transportation of natural gas or electricity 

Contracts  for  the  supply  of  natural  gas  or  electricity for  the  use  of  final  consumers 
are not wholesale energy products. 

5. 

"wholesale  energy  market"  means  any  marketplace  within  the  Union  on  which 
wholesale energy products are traded; 

EN 

12 

   EN 

6. 

7. 

8. 

"competent  financial  authority"  means  a  competent  authority  designated  in 
accordance with the procedure laid down in Article 11 of Directive 2003/6/EC; 

"national  regulatory  authority"  means  a  national  regulatory  authority  designated  in 
accordance  with  the  Article  35(1)  of  Directive  2009/72/EC  of  the  European 
Parliament  and  of  the  Council18  or  Article  39(1)  of  Directive  2009/73/EC  of  the 
European Parliament and of the Council19; 

"transmission system operator" has the meaning set out in Article 2(4) of Directive 
2009/72/EC and Article 2(4) of Directive 2009/73/EC. 

Article 3 

Prohibition of insider trading and obligation to publish inside information 

1. 

Persons  who  possess  inside  information  in  relation  to  a  wholesale  energy  product 
shall be prohibited from: 

(a) 

(b) 

using  that  information  by  acquiring  or  disposing  of,  or  by  trying  to 
acquire  or  dispose  of,  for  their  own  account  or  for  the  account  of  a 
third party, either directly or indirectly, wholesale energy products to 
which that information relates; 

disclosing that information to any other person unless such disclosure 
is  made  in  the  normal  course  of  the  exercise  of  their  employment, 
profession  or  duties.  In  this  case  they  must  make  complete  and 
efficient  public  disclosure  of  that  information.  Where  disclosure  is 
intentional  the  information  shall  be  made  available  to  all  persons 
simultaneously.  In  the  event  of  a  non-intentional  disclosure  the 
information shall be made available to all persons as soon as possible 
following the non-intentional disclosure. This point shall not apply if 
the  person  receiving  the  information  owes  a  duty  of  confidentiality, 
regardless of whether such duty is based on a law, on regulations, on 
articles of association or on a contract; 

(c) 

recommending  or  inducing  another  person,  on  the  basis  of  inside 
information,  to  acquire  or  dispose  of  wholesale  energy  products  to 
which that information relates 

2. 

The prohibition set out in paragraph 1 applies to the following persons who possess 
inside information in relation to a wholesale energy product: 

(a) 

members of the administrative, management or supervisory bodies of 
an undertaking; 

(b) 

persons with holdings in the capital of an undertaking; 

18 
19 

OJ L 211, 14.8.2009, p. 55. 
OJ L 211, 14.8.2009, p. 94. 

EN 

13 

   EN 

                                                 
3. 

4. 

(c) 

(d) 

(c) 

persons having access to the information through the exercise of their 
employment, profession or duties; 

persons who acquired such information through criminal activity; 

persons who know, or ought to know, that it is inside information. 

Where the person who possesses inside information in relation to a wholesale energy 
product is a legal person, the prohibitions laid down in paragraph 1 shall also apply 
to the natural persons who take part in the decision to carry out the transaction for the 
account of the legal person concerned. 

Market participants shall publicly disclose inside information in respect of business 
or  facilities  which  the  participant  concerned  owns  or  controls  or  for  which  the 
participant  is  responsible  for  operational  matters,  either  in  whole  or  in  part.  Such 
information  shall  include  information  relevant  to  the  capacity  of  facilities  for 
production, storage, consumption or transmission of electricity or natural gas.  

A market participant may under his own responsibility delay the public disclosure of 
inside information such as not to prejudice his legitimate interests provided that such 
omission  would  not  be  likely  to  mislead  the  public  and  provided  that  the  market 
participant is able to ensure the confidentiality of that information and does not make 
decisions  relating  to  trading  in  wholesale  energy  products  based  upon  this 
information. In this situation the market participant shall provide this information to 
the  Agency  and  the  relevant  national  regulatory  authority  having  regard  to  the 
provisions of Article 7(4)  

The first and second subparagraphs are without prejudice to the obligations of market 
participants  under  the  provisions  of  Directive  2009/72/EC,  Directive  2009/73/EC, 
Regulation  (EC)  No  714/2009  and  Regulation  (EC)  No  715/2009  including 
guidelines and network codes adopted pursuant to those Directives and Regulations, 
in particular regarding the timing and method of publication of information. 

5. 

This  Article  shall  not  apply  to  transactions  conducted  in  the  discharge  of  an 
obligation  that  has  become  due  to  acquire  or  dispose  of  wholesale  energy  products 
where  that  obligation  results  from  an  agreement  concluded  before  the  person 
concerned possessed inside information. 

Paragraphs  1  (a)  und  (c)  shall  not  apply  to  transmission  system  operators  when 
purchasing gas or electricity in order to ensure the safe and secure operation of the 
system  in accordance with their  obligation under Article 12(d) and (e)  of Directive 
2009/72/EC or Article 13(1)(a) and (c) of Directive 2009/73/EC. 

Article 4 

Prohibition of market manipulation  

It shall be prohibited to engage in, or attempt to engage in, market manipulation on wholesale 
energy markets. 

EN 

14 

   EN 

Article 5 

Specification of definitions of inside information and market manipulation  

1. 

In  order  to  take  account  of  future  developments  on  wholesale  energy  markets,  the 
Commission shall adopt delegated acts in accordance with Article 15 and subject to 
conditions  of  Articles  16 an 17,  specifying the definitions set out at Article 2(1) to 
(5). 

2. 

The delegated acts referred to in paragraph 1 shall take into account at least: 

(a) 

(b) 

(c) 

the  specific  functioning  of  wholesale  energy  markets  and  the 
interaction between commodity markets and derivative markets; 

the  potential  impact  on  wholesale  energy  market  prices  of  actual  or 
planned  production,  consumption,  use  of  transmission,  or  use  of 
storage capacity  

network codes and framework guidelines adopted in accordance with 
the provisions of Regulation (EC) No 714/2009 and Regulation (EC) 
No 715/2009. 

Article 6 

Market monitoring 

1. 

2. 

3. 

The Agency shall monitor trading activity in wholesale energy products to detect and 
prevent trading based on inside information and market manipulation. It shall collect 
the  data  for  assessing  and  monitoring  wholesale  energy  markets  as  provided  for  in 
Article 7. 

National  regulatory  authorities  shall  cooperate  with  the  Agency  in  carrying  out  the 
monitoring of wholesale energy markets referred to at paragraph 1. For this purpose 
national regulatory authorities shall have access to relevant information held by the 
Agency  which  it  has  collected  in  accordance  with  paragraph  1,  subject  to  the 
provisions of Article 8(2). 

The Agency shall at least on an annual basis submit a report to the Commission on 
its  activities  under  this  Regulation.  Such  reports  shall  bring  to  the  notice  of  the 
Commission flaws in market rules, standards, and procedures which could facilitate 
insider  trading  and  market  manipulation  or  undermine  the  internal  market.  Reports 
may be combined with the report referred to in Article 11(2) of Regulation (EC) No 
713/2009.  

The Agency may make recommendations as to the records of transactions, including 
orders to trade, which it considers are necessary to effectively and efficiently monitor 
wholesale  energy  markets.  Before  making  such  recommendations  the  Agency  shall 
consult with interested parties in accordance with the provisions of Article 10 of the 
Regulation  (EC)  No  713/2009.  In  particular  the  Agency  shall  consult  with  ESMA, 
national  regulatory  authorities  and  competent  financial  authorities  in  the  Member 
States. 

EN 

15 

   EN 

Article 7 

Data collection 

1. 

2. 

The Agency shall be provided with a record of wholesale energy market transactions, 
including orders to trade. The Commission shall adopt delegated acts in accordance 
with  Article  15  and  subject  to  conditions  of  Articles  16  and  17,  laying  down  the 
timing,  form  and  content  in  which  this  information  is  reported  and,  where 
appropriate, defining thresholds for the reporting of transactions as well as specifying 
types of contracts for which transactions shall be reported. 

The delegated acts referred to in paragraph 1 shall ensure that persons referred to in 
paragraph  3  a),    b)  and  c)  who  have  reported  transactions  in  accordance  with 
Directive 2004/39/EC20 or Regulation (EC)---/---- of the European Parliament and of 
the Council on OTC Derivatives, central counterparties and trade repositories of the 
European Parliament and of the Council [European Market Infrastructure Regulation 
– 2010/0250(COD)] are not subject to reporting obligations in addition to those set 
out in that legislation.  

Without  prejudice  to  the  first  subparagraph,  the  delegated  acts  referred  to  in 
paragraph 1 may establish a non-binding framework to allow organised markets and 
trade  matching  or  trade  reporting  systems  to  provide  the  Agency  with  a  record  of 
wholesale energy transactions.  

3. 

For the purposes of paragraph 1, information shall be provided by:  

(a) 

the market participant; 

(b) 

(c) 

(d) 

(e) 

a third party acting on behalf of the market participant; 

an organized market, a trade-matching or a trade reporting system; 

trade repositories registered or recognised under Regulation (EC)---/--
--  of  the  European  Parliament  and  of  the  Council  [European  Market 
Infrastructure Regulation – 2010/0250(COD)]; 

a  competent  authority  which  has  received  this  information  in 
accordance with the provisions of Article 25(3) Directive 2004/39/EC 
or  Article  6(2)  of  Regulation  (EC)---/----  [European  Market 
Infrastructure Regulation – 2010/0250(COD)]. 

4. 

Market participants shall provide the Agency and national regulatory authorities with 
information related to the capacity of facilities for production, storage, consumption 
or transmission of electricity or natural gas for the purpose of monitoring trading in 
wholesale energy markets. 

20 

OJ L 145, 30.4.2004, p. 1. 

EN 

16 

   EN 

                                                 
The Commission shall adopt delegated acts in accordance with Article 15 and subject 
to conditions of Articles 16 and 17, laying down the timing, form and content of the 
information to be reported. 

Article 8 

Sharing of information between the Agency and other bodies 

1. 

2. 

The  Agency  shall  establish  mechanisms  to  share  information  it  receives  in 
accordance  with  Article  6(1)  and  Article  7  with  national  regulatory  authorities,  the 
competent financial authorities of the Member States, competition authorities of the 
Member States and other relevant authorities. The Agency shall only give access to 
the  mechanisms  referred  to  in  paragraph  1  to  bodies  which  have  set  up  systems 
enabling the Agency to meet the requirements of Article 9(1). 

Trade repositories registered or recognised under Regulation (EC)---/---- [European 
Market  Infrastructure  Regulation  –  2010/0250(COD)]  shall  make  all  information 
regarding wholesale energy products collected by them available to the Agency. 

Competent financial  authorities  shall transmit  to  the  Agency reports of  transactions 
in wholesale energy products received under article 25(3) of Directive 2004/39/EC to 
the  Agency  and  Article  6(2)  of  Regulation  (EC)---/---  [European  Market 
Infrastructure Regulation – 2010/0250(COD)]. 

Article 9 

Data protection and operational reliability  

1. 

The  Agency  shall  ensure  the  confidentiality,  integrity  and  protection  of  the 
information  received  under  Article  7.  The  Agency  shall  take  steps  to  prevent  any 
misuse of the information maintained in its systems.  

Where  relevant,  the  Agency  will  comply  with  Regulation  (EC)  No  45/2001  of  the 
European Parliament and of the Council of 18 December 2000 on the protection of 
individuals  with  regard  to  the  processing  of  personal  data  by  the  Community 
institutions and bodies and on the free movement of such data21. 

The Agency shall identify sources of operational risk and minimise them through the 
development of appropriate systems, controls and procedures. 

2. 

The Agency may decide to make publicly available parts of the information which it 
holds  provided  that  commercially  sensitive  information  on  individual  market 
participants or individual transactions is not released. 

Article 10 

Implementation of prohibitions against market abuse 

21 

OJ L 8 12.1.2001, p. 1. 

EN 

17 

   EN 

                                                 
1. 

National regulatory authorities shall ensure that the prohibitions set out in Articles 3 
and 4 are applied. 

Each  Member  State  shall  ensure  that  national  regulatory  authorities  have  the 
investigatory powers necessary for the exercise of this function. These powers shall 
be exercised in a proportionate manner. These powers may be exercised: 

(a) 

directly 

(b) 

(c) 

in collaboration with other authorities or market undertakings;  

by application to the competent judicial authorities. 

2. 

The investigatory powers referred to in paragraph 1 include the right to: 

(a) 

(b) 

have  access  to  any  relevant  document  in  any  form,  and  to  receive  a 
copy of it; 

demand  information  from  any  person,  including  those  who  are 
successively involved in the transmission of orders or conduct of the 
operations concerned, as well as their principals, and if necessary, to 
summon and hear any such person; 

(c) 

carry out on-site inspections; 

(d) 

(e) 

require existing telephone and existing data traffic records; 

require the cessation of any practice that is contrary to this Regulation 
or its delegated acts; 

(f) 

request a court to freeze or sequester assets; 

(g) 

request temporary prohibition of professional activity.  

3. 

Any person professionally arranging transactions in wholesale energy products who 
reasonably suspects that a transaction might breach the provisions of Articles 3 or 4 
shall notify the national regulatory authority without further delay. 

Persons  professionally  arranging  transactions  in  wholesale  energy  products  shall 
establish and maintain effective arrangements and procedures to identify breaches of 
the provisions of Articles 3 or 4. 

Article 11 

Union level cooperation 

1. 

The  Agency  shall  ensure  that  national  regulatory  authorities  carry  out  their  tasks 
under this Regulation in a coordinated way. 

National regulatory authorities shall cooperate with the Agency and with each other 
for the purpose of carrying out their duties in accordance with this Regulation. 

EN 

18 

   EN 

2. 

National  regulatory  authorities  shall  inform  the  Agency  in  as  specific  a  manner  as 
possible  where  they  have  reasonable  grounds  to  suspect  that  acts  contrary  to  the 
provisions  of  this  Regulation,  are  being,  or  have  been,  carried  out  either  in  that 
Member State or in another Member State. 

Where  a  national  regulatory  authority  suspects  that  acts  which  affect  wholesale 
energy markets or the price of wholesale energy products in that Member State are 
being  carried  out  in  another  Member  State,  it  may  request  the  Agency  to  take 
measures in accordance with paragraph 4.  

3. 

In  order  to  ensure  a  coordinated  approach  to  market  abuse  on  wholesale  energy 
markets: 

(a) 

(b) 

(c) 

national  regulatory  authorities  shall  inform  the  competent  financial 
authority  of  their  Member  State  and  the  Agency  where  they  have 
reasonable grounds to suspect that acts, which constitute market abuse 
within the meaning of Directive 2003/6/EC, are being, or have been, 
carried  out  on  wholesale  energy  markets  and  which  affect  financial 
instruments subject to the provisions of Article 9 that Directive; 

the  Agency  shall  inform  ESMA  and  the  appropriate  competent 
financial  authority  where  it  has  reasonable  grounds  to  suspect  that 
acts,  which  constitute  market  abuse  within  the  meaning  of  Directive 
2003/6/EC, are being, or have been, carried out on wholesale energy 
markets  and  which  affect  financial  instruments  subject  to  the 
provisions of Article 9 of that Directive; 

the  competent  financial  authority  of  a  Member  State  shall  inform 
ESMA and the Agency where it has reasonable grounds to suspect that 
acts,  which  breach  the  provisions  of  Articles  3  and  4,  are  being,  or 
have  been,  carried  out  on  wholesale  energy  markets  in  another 
Member State 

4. 

In order to carry out its functions under paragraph 1, where it suspects that there has 
been a breach of the provisions of this Regulation the Agency shall have the power 
to: 

(a) 

(b) 

(c) 

request  one  or  more  national  regulatory  authorities  to  supply  any 
information related to the suspected breach; 

request  one  or  more  national  regulatory  authorities  to  commence  an 
investigation  of  the  suspected  breach,  and  take  appropriate  action  to 
remedy any such breach; 

impact,  convene  an 

where  it  considers  that  the  possible  breach  has,  or  has  had,  a  cross-
border 
investigatory  group  consisting  of 
to 
representatives  of  concerned  national  regulatory  authorities 
investigate if the provisions of this Regulation have been breached and 
in which Member State the breach took place; where appropriate, the 
Agency  may  also  request  the  participation  of  representatives  of  the 
competent  financial  authority  or  other  relevant  authority  of  one  or 
more Member States in the investigatory group. 

EN 

19 

   EN 

5. 

National  regulatory  authorities  shall  comply  with  a  request  of  the  Agency  made  in 
accordance with the provisions of paragraph 4.  

National  regulatory  authorities  receiving  a  request  for  information  in  accordance 
with  paragraph  4(a),  or  receiving  a  request  to  commence  an  investigation  of  a 
suspected  breach  in  accordance  with  paragraph  4(b),  shall  immediately  take  the 
necessary  measures  in  order  to  comply  with  that  request.  If  a  national  regulatory 
authority is not able to supply the required information immediately, it shall without 
further delay notify the Agency of the reasons. 

National  regulatory  authorities  shall  participate  in  an  investigatory  group  convened 
in  accordance  with  paragraph  4(c),  rendering  all  necessary  assistance.  The 
investigatory group shall be subject to coordination by the Agency. 

6. 

The last sentence of Article 15(1) of Regulation (EC) No 713/2009 shall not apply to 
the Agency when carrying out its tasks under this Regulation 

Article 12 

Professional secrecy  

1. 

Any  confidential  information  received,  exchanged  or  transmitted  pursuant  to  this 
Regulation  shall  be  subject  to  the  conditions  of  professional  secrecy  laid  down  in 
paragraphs 2, 3 and 4. 

2. 

The obligation of professional secrecy shall apply to: 

(a) 

persons working or who have worked for the Agency; 

(b) 

auditors and experts instructed by Agency;  

(c) 

(d) 

persons  working  or  who  have  worked  for  the  national  regulatory 
authorities; 

auditors and experts instructed by national regulatory authorities who 
receive confidential information in accordance with the provisions of 
this Regulation. 

3. 

4. 

Confidential  information  received  by  the  persons  referred  to  in  paragraph  2  in  the 
course of their duties may not be divulged to any other person or authority, except in 
summary  or  aggregate  form  such  that  an  individual  market  participant  or  market 
place cannot be identified, without prejudice to cases covered by criminal law or the 
other provisions of this Regulation, or other relevant Union legislation. 

Without prejudice to cases covered by criminal law, the Agency, national regulatory 
authorities, competent financial authorities, ESMA, bodies or natural or legal persons 
which receive confidential information pursuant to this Regulation may use it only in 
the  performance  of  their  duties  and  for  the  exercise  of  their  functions.,  Other 
authorities, bodies, natural or legal persons may use this information for the purpose 
for  which  it  was  provided  to  them  or  in  the  context  of  administrative  or  judicial 
proceedings  specifically  related  to  the  exercise  of  those  functions,  Where  the 

EN 

20 

   EN 

Agency,  national  regulatory  authorities,  competent  financial  authorities,  ESMA, 
bodies  or  natural  or  legal  persons  communicating  information  consents  thereto,  the 
authority receiving the information may use it for other purposes. 

Article 13 

Penalties  

The Member States shall  lay  down  the rules on penalties applicable  to infringements of  the 
provisions  of  this  Regulation  and  shall  take  all  measures  necessary  to  ensure  that  they  are 
implemented. The penalties provided for must be effective, proportionate and dissuasive. The 
Member States shall notify those provisions to the Commission by22... at the latest and shall 
notify it without delay of any subsequent amendment affecting them.  

Article 14 

Relations with third countries 

Without  prejudice  to  the  competences  of  the  Union  institutions,  including  the  European 
External Action Service, the Agency may establish contacts with supervisory authorities from 
third countries. It may enter into administrative arrangements with international organisations 
and the administrations of third countries. 

Article 15 

Exercise of the delegation 

1. 

2. 

3. 

1. 

2. 

The  powers  to  adopt  the  delegated  acts  referred  to  in  Articles  5  and  7  shall  be 
conferred on the Commission for an indeterminate period of time. 

As soon as it adopts a delegated act, the Commission shall notify it simultaneously to 
the European Parliament and to the Council.  

The powers to adopt delegated acts are conferred on the Commission subject to the 
conditions laid down in Articles 16 and 17.  

Article 16 

Revocation of the delegation  

The delegation of powers referred to in Articles 5 and 7 may be revoked at any time 
by the European Parliament or by the Council.  

The institution which has commenced an internal procedure for deciding whether to 
revoke  the  delegation  of  powers  shall  inform  the  other  institution  and  the 
Commission  within  a  reasonable  time  before  the  final  decision  is  taken,  indicating 

22 

OJ insert date one year after adoption of this regulation 

EN 

21 

   EN 

                                                 
3. 

1. 

2. 

3. 

the delegated powers which could be subject to revocation and possible reasons for a 
revocation.  

The decision of revocation shall put an end to the delegation of the powers specified 
in that decision. It shall take effect immediately or at a later date specified therein. It 
shall  not  affect  the  validity  of  the  delegated  acts  already  in  force.  It  shall  be 
published in the Official Journal of the European Union.  

Article 17 

Objections to delegated acts  

The European Parliament and the Council may object to the delegated act within a 
period of two months from the date of notification. At the initiative of the European 
Parliament or the Council this period shall be extended by one month.  

If,  on  expiry  of  that  period,  neither  the  European  Parliament  nor  the  Council  has 
objected  to  the  delegated  act  it  shall  be  published  in  the  Official  Journal  of  the 
European Union and shall enter into force at the date stated therein. The  delegated 
act  may  be  published  in  the  Official  Journal  of  the  European  Union  and  enter  into 
force  before  the  expiry  of  that  period  if  the  European  Parliament  and  the  Council 
have both informed the Commission of their intention not to raise objections. 

If the European Parliament or the Council objects to a delegated act, it shall not enter 
into  force.  The  institution  which  objects  shall  state  the  reasons  for  objecting  to  the 
delegated act. 

Article 18 

Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels, […] 

For the European Parliament 
The President 
[…] 

For the Council 
The President 
[…] 

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LEGISLATIVE FINANCIAL STATEMENT FOR PROPOSALS 

6. 

FRAMEWORK OF THE PROPOSAL/INITIATIVE  

6.1. 

Title of the proposal/initiative  

Regulation  (EC)  No  xxx  of  the  European  Parliament  and  of  The  Council  on  Energy  Market 
Integrity and Transparency 

6.2. 

Policy area(s) concerned in the ABM/ABB structure23  

Policy area: Energy 

Activity: Internal market in energy 

6.3. 

Nature of the proposal/initiative  

⌧ The proposal/initiative relates to a new action  

(cid:133) The proposal/initiative relates to a new action following a pilot project/preparatory action24  

(cid:133) The proposal/initiative relates to the extension of an existing action  

(cid:133) The proposal/initiative relates to an action redirected towards a new action  

6.4. 

Objectives 

6.4.1.  The Commission's multiannual strategic objective(s) targeted by the proposal/initiative  

Delivering deep, liquid and integrated energy markets fits into Europe's 2020 strategy to reach 
a smart, sustainable and inclusive growth in Europe. This goal requires among others "well-
connected  markets  where  competition  and  consumer  access  stimulate  growth  and 
innovation"25  Creating  a  proper  framework  for  the  integrity  and  transparency  of  Europe's 
traded  energy  markets  will  foster  the  desired  market  integration  and  underpin  overarching 
European policy objectives 

6.4.2. 

Specific objective(s) and ABM/ABB activity(ies) concerned  

ACER is expected to efficiently detect and prevent market misconducts of cross-commodity 
and cross-border nature on wholesale energy markets. It is also expected that its actions will 
deter attempted distortive market practices. 

23 
24 
25 

ABM: Activity-Based Management – ABB: Activity-Based Budgeting. 
As referred to in Article 49(6)(a) or (b) of the Financial Regulation. 
COM(2010) 2020, 3.3.2010: "Europe 2020 – A strategy for smart, sustainable and inclusive growth", p. 19. 

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6.4.3.  Expected result(s) and impact 

Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. 

Regular  and  timely  monitoring  of  wholesale  energy  markets,  including  details  of  wholesale 
transactions  and  the  operation  of  energy  assets  (disaggregated  production  figures,  outages, 
flow  data,  storage  operation,  etc)  will  allow  ACER  to  efficiently  detect  and  deter  market 
abuses.  This  will  give  confidence  to  market  participants  and  increase  general  trust  in  the 
proper  functioning  of  markets.  In  addition,  decreasing  risk  premia  are  expected  to  result  in 
lower energy prices to all energy users. 

6.4.4. 

Indicators of results and impact  

Specify the indicators for monitoring implementation of the proposal/initiative. 

- Number of transactions collected and monitored 

- Number of abuses detected 

- Development of bid-offer spreads over time (as a proxy for market risk premia) 

6.5. 

Grounds for the proposal/initiative  

6.5.1.  Requirement(s) to be met in the short or long term  

The objective of the 'Regulation on Energy Market Integrity and Transparency' (REMIT) is to 
create an efficient and effective framework which ensures that Europe's traded energy markets 
function properly, i.e. their outcomes are not distorted by abusive market behaviour, but truly 
reflect market fundamentals. The central element of this framework is the establishment of a 
market  monitoring  function  on  European  level.  This  function  shall  be  carried  out  by  the 
recently established Agency for the Cooperation of Energy Regulators26 (ACER). 

To fulfil its objectives ACER will need to set up a dedicated unit consisting of specialists with 
profound experience in both energy and traded financial markets. It will also have to deploy IT 
infrastructure capable of handling large number of data and specialist software for automated 
data analysis purposes. 

6.5.2.  Added value of EU involvement 

The  regular  monitoring  of  wholesale  transactions  together  with  fundamental  market 
information is an essential function for integrity and regulatory transparency of traded energy 
markets. 

Because  traded  electricity  and  gas  markets  are  strongly  interlinked,  any  manipulation 
occurring on one market would automatically impact the other. Since these commodities and 
their  derivatives  are  often  traded  in  parallel  in  different  Member  States  via  different  trading 

26 

Regulation  (EC)  No  713/2009  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  establishing  an 
Agency for the Cooperation of Energy Regulators, OJ Volume 52, 14 August 2009. 

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channels,  any  manipulation  involving  a  combination  of  different  commodity  transactions 
and/or  platforms  can  only  be  effectively  detected  if  monitoring  is  organised  centrally.  The 
Impact Assessment to this initiative has shown that a central monitoring function will not be 
provided by the market but can be best organised on European level within an existing Agency 
with  energy  profile.  The  placement  of  the  market  monitoring  function  within  ACER  would 
allow  for  the  utilisation  of  the  invaluable  energy  expertise  of  its  incumbent  staff  and  enable 
operation  at  least  possible  costs  by  sharing  some  of  the  already  budgeted  overhead  cost  of 
ACER 

6.5.3.  Lessons learned from similar experiences in the past 

No similar experience exists 

6.5.4.  Coherence and possible synergy with other relevant instruments 

The  rules  prohibiting  market  misconduct  are  coherent  with  comparable  rules  in  applicable 
financial  regulation,  notably  the  Market  Abuse  Directive.  In  addition,  the  proposal  will 
introduce a genuine European level wholesale energy transaction monitoring function 

6.6. 

Duration and financial impact  

⌧ Proposal/initiative of unlimited duration  

The  financial  impact  of  the  initiative  for  the  years  2012  and  2013  is  in  addition  to  funds  already 
foreseen in the current multiannual financial programming.  

6.7.  Management mode(s) envisaged27  

Resources shall be managed by the Agency for the Cooperation of Energy Regulators 

27 

Details  of  management  modes  and  references  to  the  Financial  Regulation  may  be  found  on  the  BudgWeb  site: 
http://www.cc.cec/budg/man/budgmanag/budgmanag_en.html 

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7. 

MANAGEMENT MEASURES  

7.1.  Monitoring and reporting rules  

Specify frequency and conditions. 

ACER  shall  report  to  the  Commission  on  a  regular  basis  on  its  activities  in  the  field  of 
wholesale transaction monitoring and about market abuses that it identified and the results of 
investigations carried out by enforcement authorities 

7.2.  Management and control system  

7.2.1.  Risk(s) identified  

Risk of inappropriate data handling 

7.2.2.  Control method(s) envisaged  

The legal proposal contains a number of measures on data protection and operational liability. 
Further control measures are also envisaged by ACER's governing rules. See also Article 34 of 
Regulation (EC) No.  713/2009 of the European Parliament  and  the Council  of 13 July 2009 
establishing an Agency for the Cooperation of Energy Regulators. 

7.3.  Measures to prevent fraud and irregularities  

Specify existing or envisaged prevention and protection measures. 

The management of the funds entrusted to the Agency comes under the control of the Court of 
Auditors  (Article  21),  the  European  Parliament  (Article  21)  and  the  European  Anti-Fraud 
Office (Article 23). 

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8. 

ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE  

8.1. 

Heading(s)  of  the  multiannual  financial  framework  and  expenditure  budget  line(s) 
affected  

•  Existing expenditure budget lines  

In order of multiannual financial framework headings and budget lines. 

Budget line 

Type of  
expenditure

Contribution  

Number  
[Description………………………...……….] 

DA/NDA 
(28) 

from 
EFTA29 
countries 

from 
candidate 
countries30 

from third 
countries 

within the meaning 
of Article 18(1)(aa) 
of the Financial 
Regulation  

32.04.10. 
Cooperation of Energy Regulators 

–  Agency 

for 

the 

DA 

YES 

NO 

NO 

YES 

Heading of 
multiannual 
financial 
framework 

1 A 

28 
29 
30 

DA= Differentiated appropriations / DNA= Non-Differentiated Appropriations. 
EFTA: European Free Trade Association.  
Candidate countries and, where applicable, potential candidate countries from the Western Balkans. 

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8.2. 

Estimated impact on expenditure  

8.2.1. 

Summary of estimated impact on expenditure  

Heading of multiannual financial 
framework:  

Number 

[Heading …1 A 

…………...……………………………………………………………….] 

EUR million (to 3 decimal places) 

 ACER (Agency) 

Year 
2012 

Year 
2013 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

(cid:121)appropriations  

Equipment 

 Operating costs 

Commitments/P
ayments 

(1) 

0.985 

0.100 

Commitments/P
ayments 

(2) 

0.050 

0.100 

Mission expenditure for the new task 

Human Resources 

Commitments/P
ayments 

Commitments/P
ayments 

(3) 

(4) 

0.015 

0.090 

0,265 

1,323 

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Year 
2012 

Year 
2013 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

TOTAL 

EUR million (to 3 decimal places) 

TOTAL appropriations  
under HEADING 1  
of the multiannual financial framework  

Commitments 

1,315 

1,613 

Payments 

1,315 

1,613 

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8.2.2.  Estimated impact on ACER appropriations  

–  The proposal/initiative requires the use of appropriations, as explained below: 

Equipment 

According  to  our  estimate  the  software  architecture  development  phase  could  cost  around 
500.000€, without the integration of any data. The  licenses fee, including an Oracle database, 
an ETL software and a specialised screen for further data analyses could reach 50.000€. As 
for the hardware cost, an initial 15.000€ should be foreseen. 

In addition to the above 565.000€, a data flow from  every data provider to the database should 
be established. The set-up of every new (complex) table to import data from a provider is a 
costly exercise with 1500€/table. Assuming  around 200 data providers (20 trading platforms 
and 180 directly reporting traders across Europe), and a single table to be made available by 
each  data  provider  on  their  http/ftp  server,  an  additional  300.000€  is  needed.  This  gives 
(565.000€ + 300.000€) 865.000€. The cost of initial quality
 check and testing on the software 
development  &  implemented  tables,  as  imposed  by  Commission  standards  amounts  to  an 
additional  15%  of  the  above  costs  (exclusive  hardware  and  license  fees).  This  is  altogether 
985.000€. 

The  annual  cost  for  the  database  maintenance  and  enhancements  would  probably  reach 
100.000€.  This  can  be  broken  down  as  follows:  assuming  that  around  30  additional  data 
providers will need to be included per year for a few years, the cost would be 30*1.500€ = 
45.000€.  The  software  licenses  could  reach  25.000€  depending  on  the  needs,  the  hardware 
maintenance cost could reach 5.000€ and the software enhancements could reach 25.000€. 

Operating costs 

Additional  budget  will  be  needed  to  cover  costs  for  meetings  and  studies,  as  well  as 
translation, publication and public relations. Based on preliminary estimates, these operating 
costs will amount to 50.000€ in the first year , 100.000€ in the second year, and 300.000€ from 
the third year assuming that studies will not be ordered during the first years.  

Mission expenditure  

In  order  to  discharge  its  tasks,  the  team  will  need  to  organise  missions  transport  and 
accommodation costs). The mission expenses budget is estimated to come to € 0,113 million 
per  year  once  the  additional  team  is  fully  operational.  These  estimates  are  based  on  actual 
average mission expenses costs attributed to DG ENER.  

Staff expenditure 

In addition to the database itself and its development which will require external expertise, the 
absolute  minimum  staff  needed  for  maintaining  and supervising  system  developments, 
validating the data gathered, analysing the data, drafting reports, running investigative teams 
is 15 additional staff. This is broken down as follows: 

The  maintenance  and  the  supervision  of  the  developments  includes,  among  others,  the 
management of contracts with data providers and developers (financial and contractual), the 
drafting of technical specifications, the testing of the environment, the user management and 

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support, etc. Two persons are needed to give the required support to the team. The validation 
of the data gathered is another essential task, and involves at least three persons considering 
the number of data providers (200 providers with hourly/daily data). Analysing the data will 
require at least six persons. Drafting of reports, preparing the cases to the monitoring board, 
running  the  investigative  groups  will  involve  three  persons.  One  staff  will  be  required  to 
manage the monitoring team.  

Total annual staff expenditure is estimated at € 1,59 million once the additional team is fully 
operational, taking as the average the cost of European Commission staff, i.e. € 0.127 million 
per  year,  which  includes  expenditure  associated  with  buildings  and  related  administrative 
expenditure (mailing charges, telecommunications, etc.). 

Staff  expenditure  will  cover  recruitment  costs  from  2012.  The  staff  expenditure  estimate  is 
based on the following recruitment plan: 

Recruitment 

ACER 
– 
Temporary Agents 

staff 

External  staff  –  SNEs 
from NRAs 

First semester 2012 

Second semester 2012 

First semester 2013 

Second semester 2013 

0 

+5 

+5 

+5 

3 

6 

9 

0 

2 

4 

6 

For  the  calculation  we  assumed  that  additional  human  resources  will  be  60%  covered  by 
Temporay Agents (€ 127.000 p.a) and 40% by Nati onal Experts (€ 74.000 p.a). This reflects a 
mix  which  utilises  the  existing  energy  market  expertise  with  national  energy  regulators 
(NRAs)  and  experts  who  have  gained  specific  knowledge  in  wholesale  commodity  and/or 
derivatives trading. Such experts are less likely to be found with NRAs and would therefore 
have to be recruited as Temporary Agents.  

Year 
2012 

Year 
2013 

… enter as many years as 
necessary to show the 
duration of the impact 
(see point 1.6) 

(cid:121) Establishment plan posts (officials and temporary agents) 

Temporary agents at ACER 

0,191 

0,952 

(cid:121) External personnel (in Full Time Equivalent unit: FTE)31 

SNEs attached to ACER 

TOTAL 

0,074 

0,370 

0,265 

1,323 

The agency will ask for the additional staff in the frame of the draft budget procedure of the 
concerned year through the MASPP and the budgetary financial statement.  

31 

CA= Contract Agent; INT= agency staff ("Intérimaire"); JED= "Jeune Expert en Délégation" (Young 
Experts in Delegations); LA= Local Agent; SNE= Seconded National Expert. 

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8.2.3.  Compatibility with the current multiannual financial framework  

–  ⌧Proposal/initiative  is  compatible  with  the  current  multiannual  financial 

framework. 

8.2.4.  Third-party contributions  

–  The proposal/initiative does not provide for co-financing by third parties  

–  The proposal/initiative provides for the co-financing estimated below: 

Appropriations in EUR million (to 3 decimal places) 

Year 
N 

Year 
N+1 

Year 
N+2 

Year 
N+3 

… enter as many years as 
necessary to show the duration 
of the impact (see point 1.6) 

Total 

Specify  the  co-financing 
body  

TOTAL appropriations 
cofinanced  

8.3. 

Estimated impact on revenue  

–  ⌧Proposal/initiative has no financial impact on revenue. 

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