III.7.12.
How can a market participant (Company A) fulfil its obligations under Article 4 of REMIT and comply with the prohibition under Article 3 of REMIT when:
(i) Company A holds an inside information relating to Company B’s facility (Company B is NOT a market participant);
(ii) Company A holds an inside information on the asset of another market participant (Company C). Company C does not consider the information to be inside information. However, Company A considers that this information meets the definition of inside information pursuant to Article 2(1) of REMIT, wherein the companies are not parent/related undertakings.
Answer: According to the 6th edition of the ACER Guidance on the application of REMIT (’’ACER Guidance’’, section 4.1), ‘the obligation to disclose inside information does not apply to a person or a market participant who possesses inside information in respect of another market participant’s [or other entity’s] business or facilities, in so far as that owner of this inside information is not a parent or related undertaking. Notwithstanding this, persons holding information in such circumstances will need to consider their compliance with Article 3 and in particular whether they hold such information as one of the persons listed in Article 3(2).’
Therefore, if a piece of information qualifies as inside information, Company A will need to consider its compliance with Article 3 of REMIT (prohibition of insider trading). In particular, Company A could hold such inside information as one of the persons listed in Article 3(2) of REMIT (e.g. persons with access to the information through the exercise of their employment, profession or duties under Article 3(2)(c) of REMIT).
In relation to this, the Agency encourages persons holding such information f rom third market participants to promptly inform the relevant market participant(s) in order to promote effective and timely compliance with Article 4(1) of REMIT.
Company A should also consider whether the inside information received f rom Company B has or will have a material impact on its own business or facilities that is likely to significantly impact the prices of wholesale energy products. If so, Company A holds inside information related to its business and facilities (this is different information f rom the one originally received, as it results f rom Company A’s own assessment of the consequences for its business and facilities) and shall publish it in an effective and timely manner in compliance with Article 4(1) of REMIT.
CASE (i)
Regarding case (i), provided that the inside information is not published by Company B (which is not a REMIT MP with obligations under Article 4(1) of REMIT), Company A will not be allowed to trade using such inside information as this would cause a potential breach of Article 3 of REMIT (insider trading).
This situation can happen, for example, when Company A (REMIT MP) is buying/importing energy f rom Company B that is: (a) an energy producer located outside EU and not a REMIT MP, and the potential inside information relates to its facility/asset; (b) an LSO/SSO located outside EU and not a REMIT MP; or (c) an LSO/SSO located in the EU but not a REMIT MP.
Given the constraints that the situation is imposing on Company A’s trading activities, Company A can explore the following possibilities:
• Invite Company B to voluntarily disclose the information (at least the component of the information that is precise and likely to significantly impact the prices of wholesale energy prices). That would constitute a voluntary disclosure (not mandatory under REMIT given the fact that Company B is not a REMIT market participant). Once that information is public, Company A can trade based on it.
• Assess whether the inside information received f rom Company B has or will have a material impact on its own business or facilities that is likely to significantly impact the prices of wholesale energy products. If so, Company A will be able to disclose the inside information related to its business and facilities in compliance with Article 4(1) of REMIT (this is dif ferent information from the one originally received, as it results f rom Company A’s own assessment of the consequences for its own business) and will therefore be able to trade based on that information.
CASE (ii)
Concerning case (ii), provided that the inside information is not published by Company C (REMIT MP), Company A will not be allowed to trade using such inside information as this would cause a potential breach of Article 3 of REMIT (insider trading).
Therefore, Company A shall promptly inform Company C that it qualifies the information received as inside information and advise Company C to disclose it.28
The Agency considers that Company A should also assess (with the information provided by Company C) if it holds any other information concerning Company A’s own business or facilities that could qualify as inside information. If so, Company A should also publish its own inside information pursuant to Article 4(1) of REMIT. Such information can, for instance, cover the amount of energy not being imported as originally foreseen; its own energy not being produced due to the shortage of imported energy f rom Company C; a certain facility not being available; or a certain supplier experiencing issues or declaring a force majeure situation.
Once inside information is disclosed, trading based on that information will be allowed for both market participants.
OTHER CONSIDERATIONS
Sharing of inside information among companies - Company B or C:
In their assessments, NRAs shall also evaluate whether the disclosure of inside information f rom Company B/C (the owner of the impacted asset) to Company A was done in the normal course of the exercise of the employment, profession or duties as per Article 3(1)(b) of REMIT. If so, the disclosure can be exempted from the prohibition of disclosure of inside information to any other person (Company A). Otherwise, such disclosure represents a breach of Article 3(1)(b) of REMIT.
Contractual causes that impose restriction on the public disclosure of information
It is a common standard that contracts for the supply of electricity/gas incorporate some confidentiality clauses. When signing these contracts, market participants should consider whether those clauses include areas for which there is a mandatory legal regime imposing the disclosure of inside information under EU law or other national laws. If so, such confidentiality clauses will be considered null and should therefore be appropr iately amended in order to comply with all the existing legal requirements that govern these relationships.