The Market Participant (MP), Non Financial Company (NFC) on the XYZ platform concludes purchase transactions of Physical Transmission Rights (PTRs) or Financial Transmission Rights - (FTRs) in monthly cross border products. If they do not use them, they are resold by the platform in accordance with the UIOSI (Use-It-Or-Sale-It) principle as part of daily products.
Please for confirmation, that:
- the above mentioned transactions should be report by XYZ platform according to Regulation 1227/2011 on behalf of MP, pursuant to article 8 (1) Regulation 1227/2011and article 6 (1) Regulation 1348/2014,
- the above mentioned UIOSI transactions are the primary market transactions (not secondary market transactions),
- the above mentioned transactions of PTRs and FTRs on the XYZ platform are not financial instruments, according to Article 2(1)(n) of MiFID II.
In our opinion:
- the above-mentioned transactions should be reported by the XYZ platform in accordance with Regulation 1227/2011 on behalf of MP, in accordance with Art. 8 clause 1 of Regulation 1227/2011 and Art. 6 clause 1 of Regulation 1348/2014,
- the abovementioned UIOSI transactions are transactions on the primary market (not transactions on the secondary market),
- the above-mentioned PTR and FTR transactions on the XYZ platform are not financial instruments in accordance with Art. 2 clause 1 lit. n) MiFID II.
The mentioned articles do not assign reporting obligation to XYZ platform.
As indicated in paragraph 4 of the introduction of Commission Implementing Regulation (EU) No 1348/2014, the details of transportation contracts acquired through primary capacity allocation of a transmission system operator (TSO) should in general be reported by the respective TSO only (or third parties acting on their behalf) in order to facilitate data collection. Therefore, the market participant’s reporting obligation is considered fulfilled, since the data related to primary capacity allocation is provided to the Agency by the TSO or a third party acting on their behalf (such as XYZ platform). For more information, please consult Article 6(2) of the above-mentioned Regulation.
Regarding the UIOSI principle,
- Pursuant to Article 3(1)(b)(i) of REMIT Implementing Regulation No 1348/2014, contracts related to the primary allocation of electricity capacity in the Union shall be reported to the Agency within the obligations set out in Article 8 of the REMIT Regulation;
- According to Article 45 of the Annex I to ACER Decision 03/2017, physical transmission rights are subject to the UIOSI principle;
- Due to such a principle, once the purchased capacity is not nominated, the same capacity is automatically made available for the day-ahead capacity allocation, with a remuneration established in Articles 45 and 48 of ACER decision 03/2017;
- Pursuant to Article 8 of REMIT Implementing Regulation No 1348/2014, electricity TSOs or third parties on their behalf shall report to the Agency final nominations between bidding zones specifying the identity of market participants involved and the quantity scheduled.
In consideration of the above-mentioned elements, in the Agency’s view the transactions related to the automatic return of capacity as execution of the UIOSI principle should not be considered as results of primary allocation, nor should they be included in the data reporting process. Furthermore, it is our understanding that the difference between primary allocation, secondary allocation (if applicable) and nominations is the UIOSI principle.
According to Q&A II.3.8., the Agency's understanding of Article 2(4) of REMIT and of Article 3(1) of the REMIT Implementing Regulation is that FTRs and PTRs are wholesale energy products that are listed as reportable contracts according to Article 3(1) of the REMIT Implementing Regulation. This is why the Agency has to consider FTRs and PTRs as wholesale energy products that will be reported to the Agency pursuant to Article 8(1) of REMIT, as long as ESMA does not specify in its guidance documents that these wholesale energy products are identified as financial instruments according to MiFID II that have to be reported under MiFIR and/or EMIR. The reporting obligation concerning any similar product should follow the same logic.
As long as the relevant products are not reportable under MiFIR or EMIR, the reporting obligation under REMIT applies even if the financial authorities were to define the relevant products as financial instruments in MiFID II. As long as these products are not reported under MiFIR or EMIR, the reporting under REMIT does not constitute a case of double reporting under Article 8(3) of REMIT.