Market Participant A enters into a transaction executed via Direct Market Access (DMA) service which is offered by a DMA provider towards their clients.
What are the obligations of the DMA Client and the DMA Provider from the point of view of the REMIT regulation?
How are such transactions expected to be reported under REMIT?
It is ACER’s understanding that the Direct Market Access service offers entities (the DMA clients) the possibility to trade on an OMP via the account of one of its members (DMA provider) based on a DMA agreement. The definition of Direct Market Access considered in the REMIT framework coincides with the one provided in Article 4(1)(41) of MiFID II as a representation of Direct Electronic Access.
ACER’s expects that the reporting of transactions, including orders to trade, concluded via a third party account by virtue of a service that falls under the definition of DMA , irrespectively of whether it is explicitly referred to as ‘DMA’, complies with the guidance provided in this FAQ.
When a DMA provider offers the DMA service to its client on an OMP, transactions including orders to trade, are concluded by the DMA client via the account of the DMA provider. According to the TRUM, in general, if a member or participant of an OMP enters into a transaction on the wholesale energy market on behalf of third entities, it shall be considered a market participant under REMIT in case the delegation to trade encompasses the responsibility for the trading activity, such as compliance with REMIT Articles 3 and 5. In such a case, the DMA provider has the responsibility for the trading activity and is therefore a REMIT market participant to be indicated in Data Field (1) ID of the market participant or counterparty. This does not necessarily imply that DMA provider is the decision maker or the final beneficiary of the transaction, but it is responsible for the reporting of the transaction. In case there is no such delegation to trade in place, the actual market participant (i.e. DMA client) should be indicated in Data Field (1).
It is ACER’s understanding that the DMA Client enters into transactions, including the placing of orders to trade, in at least one wholesale energy market by acting on a third party account (the DMA provider’s one) and on its own behalf. Indeed, the trading strategy is put in place directly by the DMA client, who is the final beneficiary of the transactions. Therefore, the DMA client falls under the definition of a market participant under REMIT and has to be indicated in Data Field (8) Beneficiary ID by a unique code registered in CEREMP. As explained above, in case there is no delegation to trade in place between the DMA provider and the client, the DMA client shall be indicated in Data Field (1) instead of Data Field (8). Being a REMIT market participant, the DMA client has to comply with the obligation to register in CEREMP via the relevant NRA. Since transactions carried out via the DMA service are concluded on organised market places, the exemption under the MPs’ obligation to register in CEREMP as specified in Article (4)2 of the REMIT Implementing Regulation does not apply.
In consideration of the obligation to report the beneficiary of transactions according to Article 8(1) of REMIT, DMA providers are required to inform the relevant OMP whenever their trading activity occurs on behalf of a third entity. Therefore, if the OMP is aware that a transaction is concluded on behalf of a third party, Data Field (10) Trading capacity is expected to be populated with the value ‘A’ as ‘Agent’, irrespectively of whether the identification of the final beneficiary is known at the due time of the REMIT reporting.
In case the final beneficiary is not known by the due time of the REMIT reporting, Data Field (8) shall be left blank and is required to be updated and reported as a lifecycle event (according to the guidance provided in Annex VII to the TRUM) once the beneficiary is known.
As indicated in the TRUM Annex III, reporting parties shall bear in mind that the above considerations do not apply if the same information for the trade was already reported under EMIR