On 25 September 2024, the European Union Agency for the Cooperation of Energy Regulators (ACER) published an Open Letter on the designation of representatives by non-EU market participants and on the new obligations of persons professionally arranging or executing transactions (PPAETs) as set out under the revised Regulation (EU) 1227/2011 on wholesale energy market integrity and transparency (revised REMIT).

Designated representatives

By way of background, the revised REMIT requires market participants who are not resident or established in the EU, to designate by a written mandate a representative in the EU by 8 November 2024. The designated representative is intended to be a point of contact for ACER and/or the national regulatory authority (NRA) on all issues necessary for the receipt of, compliance with and enforcement of decisions or requests for information issued in relation to the revised REMIT. Third-country market participants will have to provide their designated representative with the necessary powers and means to guarantee their efficient and timely cooperation with ACER and/or the NRAs, and to comply with the decisions and the requests for information, including providing access to the requested information. Market participants will also have to notify the contact details of their designated representative (the name, email address, postal address and telephone number) to their NRA. Notifications can be done via the CEREMP platform, with the exception of market participants registered in Italy, Romania and Slovenia who will have to notify their own NRA directly. Finally, the revised REMIT mandates ACER to issue guidelines and recommendations on the application of the designated representative requirement.

In it’s Open Letter ACER provided guidance on some of the most frequency asked questions in respect of the application of the designated representative requirement.

ACER confirms that the designated representative must be in the same country in which the non-EU market participant is registered with the NRA, that the designated representative can be a natural or legal person, who is established or resident in the EU, and that this function can be performed by a non-affiliated third-party. In case the non-EU market participant is part of the group, ACER confirms that each non-EU market participant must appoint a designated representative separately; where two non-market participants are active in the same Member State, they may designate the same representative but through separate arrangements and upon the condition that they are both registered with that Member State’s NRA. ACER also discusses, albeit in high level terms, contractual and procedural aspects of designating a representative.

PPAETs

In respect of PPAETs, the revised REMIT replaces the existing provisions applicable to “persons professionally arranging transactions” with a new definition of a PPAET and an extended set of requirements. It requires PPAETs to report suspicious transactions in breach of revised REMIT’s requirements on insider trading and market manipulation, as well as suspicious orders and potential breaches of the obligation to publish inside information. To this end, PPAETs will have to establish and maintain effective arrangements, systems and procedures to identify potential breaches of revised REMIT prohibitions, guarantee that their employees carrying out surveillance activities are protected from any conflict of interest and act in an independent manner, detect and report suspicious orders and transactions. In addition, persons professionally executing transactions under the Market Abuse Regulation and who also execute transactions in wholesale energy products that are not financial instruments, and who reasonably suspect that an order to trade or a transaction placed on or outside an organised market place could breach revised REMIT, will have to notify this to ACER and to the relevant NRA.

In its Open Letter ACER provides guidance on the definition of PPAETs.

For example, it discusses the scope and concept of “person professionally arranging transactions” and of “person professionally executing transactions”. In respect of “person professionally arranging transactions”, ACER provides guidance on how to classify a person as such, in addition to those explicitly referenced under legislation, based on three cumulative criteria (i.e. being a “person”, acting “professionally” and “arranging transactions”). It confirms that the main characteristic of a “person professionally arranging transaction” is its professional intermediary role, i.e. reception and transmission of orders in wholesale energy products. In respect of “persons professionally executing transactions”, ACER confirms that “execution” should include trading on own account as well as execution of orders on behalf of a third-party. ACER confirms that PAPETs notifications concerning potential breaches of REMIT must be done when there is reasonable suspicion and without further delay (maximum within four weeks), notifications should be done in a reasonable and proportionate manner and in this context it provides some specific guidance to “persons professionally arranging transactions” and “persons professionally executing transactions”. ACER also reminds PPAETs of an obligation to have in place appropriate arrangements and procedures on how to determine whether an event is suspicious, and how to notify a potential breach to ACER and to the relevant NRA(s), as well as how to guarantee the independence and preservation from conflict of interest of surveillance personnel. Finally, ACER makes a point that both ACER and NRAs “expect PPAETs notifications to be sufficiently substantiated and meaningful”.