ACER issues REMIT 2 Guidance for PPAETs and Non-EU Firms

ACER incudes two Annexes in its open letter which we summarise further as follows:

• Annex I: Changes in the revised REMIT introducing a representative for non-EU market participants (Article 9 of REMIT)
• Annex II: Obligations of PPAETs according to the revised REMIT

Annex I: Changes in the revised REMIT introducing a representative for non-EU market participants (Article 9 of REMIT)

Annex I of ACER’s open letter focuses on the new obligation for non-EU market participants to designate an EU-based representative by 8 November 2024, as part of the revised REMIT 2 regulation under Article 9(1).

This requirement applies to market participants established or resident in third countries who engage in wholesale energy transactions that must be reported to ACER. The designated representative will serve as the primary point of contact for the NRAs and ACER on compliance matters, including receiving communications, requests for information, and enforcement actions.

Market participants must ensure that their representative is based in the same Member State where they are active, and they must register with the relevant NRA. If a non-EU participant is active in multiple EU Member States, they can choose to designate their representative in any of those states but must update their registration to reflect this choice.

ACER’s letter provides further clarification on procedural aspects, including:

• How to designate a representative;
• The nature of the relationship between the representative and the market participant; and
• Answers to frequently asked questions.

Additionally, market participants must provide detailed contact information for their designated representative, including the name, email address, postal address, and phone number, to both ACER and the NRA of the designated representative’s Member State.

ACER prepared answers to questions it has received, regarding which Member State the representative should be designated in, and whether an existing presence in the EU of a non-EU market participant requires the designation of such a representative.

The letter emphasizes the importance of a formal contractual mandate between the non-EU market participant and the representative, ensuring that the representative has the necessary powers to comply with regulatory obligations including requests for information by ACER and the NRAs, and any enforcement decisions issued.

Market participants are advised to review these new obligations and take steps to comply by the November 2024 deadline.

Executive Summary

• Non-EU market participants without an EU presence must designate a representative in any EU Member State where they are active.
• For those active in one Member State, they must register and designate a representative in that state.
• If active in multiple states, participants can choose where to designate their representative but must re-register accordingly.
• The designated representative does not need to be a subsidiary or branch but must be based in the EU.
• Representatives can be natural or legal persons, such as law firms or consultancies.
• Non-EU Registered Reporting Mechanisms (RRMs) must be fully established in the EU, and appointing a representative alone does not meet compliance requirements.
• PPAETs must comply with reporting obligations under REMIT and ensure that representatives align with their trading activities across multiple jurisdictions.

Key Takeaways: 

[1] When the non-EU market participant does not have any presence in the EU and: 

• Single-Member-State Activity only. If a non-EU market participant is active in only one Member State, it must designate a representative in that same state where it is already registered with the NRA. If the participant is not yet registered, they must do so in the active state and designate a representative there.
• Multi-Member-State Activity. For non-EU market participants active in multiple Member States, they can either designate a representative in the same state where they are already registered or choose another Member State where they are active. If they choose a different Member State, they must re-register with the NRA of that state.
• Change of Registration. If the participant changes the registration to another Member State, the registration update can be done through ACER's Centralized European Register for Energy Market Participant's (CEREMP) "Change Member State" functionality. This change will result in a new ACER code issued to the market participant.
• Novation Requirement for MPs and respective Counterparties. The MP will need to report lifecycle events (novations) to already reported and outstanding trades and contracts using the newly issued ACER code should they change their Member State registration. Novations will also have to be reported by the counterparty. For further information on how to report novations, please consult TRUM Annex VII here.

[2] Questions and answers regarding representative designation by non-EU market Participants

2.1 Member State of the market participant registration and of the representative

“2.1.1 As a third-country market participant, can you register one member state EU representative with another member states NRA? For example, member state A office registered with NRA of member state B or is it driven by the member state that gave the third country its ACER number?”

ACER provides an illustration on page 7 outlining scenarios of an MPs registration and their representatives in Member States (MSs) and what is and is not acceptable when nominating a designated representative.

• Representative Designation Flexibility. Non-EU market participants can designate their representative in any Member State where they are active in wholesale energy markets. This flexibility allows the participant to choose the most suitable Member State for the designation.
• Registration Requirement. Once a representative is designated in a specific Member State, the non-EU participant must register with the NRA of that same Member State. The registration must align with where the representative is based.
• Re-Registration upon Change of State. If a market participant is registered in one Member State (e.g., Member State A) but decides to designate a representative in another (e.g., Member State B or C), they must de-register from the original state (A) and re-register in the new state (B or C).
• ACER Code Number Alignment. The participant's registration and ACER code number will move to the new Member State where the representative is designated, ensuring compliance with REMIT reporting obligations.

“2.1.2 For company A with the seat outside of the EU and with registration with German NRA for REMIT, is it possible to have designated representative with the seat for example in Slovenia or Hungary or it must be with seat in Germany where company A is registered for REMIT?”

ACER refers to the illustration in 2.1.1 and confirms the following:

• Freedom of Choice. Non-EU market participants are free to designate their representative in any Member State where they are active.
• Multiple Active States. If a participant is active in multiple Member States (e.g., Germany, Slovenia, Hungary), they can choose any of those countries for their representative.
• Re-registration Requirement. Once a representative is designated in a specific Member State (e.g., Slovenia), the participant must move their registration to that state's NRA.
• Alignment of Registration and Representative. Only one designated representative and respective NRA registration is required when a Market Participant is trading in multiple Member States. The Market Participant's registration must align with the Member State where the representative is based to ensure compliance with REMIT.

2.1.3 If the legal entity is outside the EU but registered in Hungary because it is active only at the borders (with delivery in the EU), should it have a representative?

ACER confirms such a company must have a representative in the EU and reiterates:

• Mandatory EU Representative. Non-EU companies trading wholesale energy products as defined by REMIT must designate a representative within the EU.
• Registration Requirement. The non-EU market participant must register in the EU Member State where they are active in the wholesale energy market.
• Dual Obligation. Both registration in the active Member State and the designation of a representative are required for compliance with REMIT regulations.

“2.1.4 Article 9 - If the non-EU market participant is registered with an NRA (e.g., Germany BnetzA) is it acceptable to appoint a Designated Representative in Germany on this basis - or must we ensure the market participant is also active in power/gas products in Germany?”

• Flexibility in Representative Designation. A non-EU market participant registered in Germany can choose to designate its representative in Germany or in any other Member State where it is active.
• Active Participation in Germany. The participant must still be active in Germany to maintain the representative there; otherwise, it must designate a representative in another active Member State.
• Registration Alignment. If the non-EU participant is no longer active in Germany, it must change its registration to the Member State where it is currently active, ensuring compliance with REMIT.
• Continued REMIT Compliance. The participant must ensure that their activities still fall under REMIT jurisdiction when changing the registration and representative designation.

2.2 Nature and role of the designated representative

2.2.1 Is the EU-representative for non-EU companies expected to be a natural or legal person?

• Representative Type Flexibility. The designated representative for a non-EU market participant can be either a natural person (an individual) or a legal person (a company or legal entity).
• No Restriction on Representative Form. There is no limitation on whether the representative must be an individual or a corporate entity.
• Broad Options for Designation. Market participants have the freedom to choose the most suitable type of representative based on their business structure and needs

2.2.2 Does the designated representative have to be a branch, subsidiary, or in some other legal relation with our non-EU based company?

• Independent Representative. The designated representative does not need to be a branch or subsidiary of the non-EU market participant.
• Flexibility in Representation. Market participants can choose a representative that is not directly affiliated with their company, such as an independent entity.
• No Corporate Link Required. There is no obligation for the representative to have any formal legal relationship, like being a subsidiary, with the non-EU market participant.

2.2.3 Does the designated representative have to be active in wholesale energy markets (to have EIC code, ACER code, etc.)?

ACER states no.

“2.2.4 For non-EU based company, does such representative have to be physically based in EU countries? Or if anyone who sits outside of EU has both caps in EU registered company as well, would it be accepted?”

• Location Requirement. The representative must be designated in an EU Member State where the non-EU market participant is actively involved in the wholesale energy market.
• EU Residency or Establishment. The representative must be either established or resident in the European Union to comply with REMIT regulations.
• Active Market Connection. The representative’s designation is tied to the non-EU participant’s activity in a specific Member State, ensuring alignment between market activity and regulatory oversight.

2.2.5 Regarding the EU representation for market participants who are registered in 3^rd party countries - are we envisaging that this can be fulfilled by agencies, and will there be a clear process to be followed in making this registration?

• Third-Party Agencies are Allowed. Non-EU market participants can designate third-party companies, such as consultancies or law firms, as representatives, provided these entities are established in the EU.
• Contractual Agreement Required. A formal contractual arrangement must be in place between the non-EU participant and the third-party representative, outlining the compliance obligations.
• Registration Responsibility. The non-EU market participant is responsible for registering the designated representative through the CEREMP platform.

2.3 Contractual and procedural aspects of designating a representative

2.3.1 Non-EU firm designating a representative. Do you have expectations as to how the designation letter/agreement should look? If so, can you provide a template?

• Contractual Flexibility. REMIT does not specify the exact form of the contractual arrangement between a non-EU market participant and its representative, leaving flexibility in structuring the agreement.
• Obligations Under Article 9. The contractual arrangement must reflect the requirements in Article 9 of REMIT, ensuring that the representative is designated in a Member State where the participant is active and registered with the respective NRA.
• Authority of the Representative. The representative must be empowered to act on behalf of the non-EU participant, handling compliance, communications, and requests from the NRA or ACER.
• Contact Information. Non-EU participants must provide detailed contact information for their designated representative to both the relevant NRA and ACER, ensuring clear lines of communication.

“2.3.2 I am acting as Representative for a market participant. This market participant is already registered with CRE (French NRA). I would like to register as such with CRE and ACER, in accordance with the obligations arising from the REMIT reform (Article 9). Could you tell me how to go about this?”

ACER clearly denotes that it will be the market participant (so called market participant user in CEREMP) that will register the representative in CEREMP.

2.4 Special cases and non-EU Registered Reporting Mechanisms (RRMs)

“2.4.1 If we have several non-EU market participants under one parent entity, is it sufficient that just one of these non-EU market participants are active in power/gas markets in which we choose to designate a representative? Or do we need to assess on an entity-by-entity basis?”

• Individual Assessment for Each Entity. The designation of a representative must be assessed separately for each non-EU market participant, even if they are subsidiaries of the same parent company.
• No Consolidation Across Subsidiaries. The trading activities of one subsidiary are not considered when determining the representative requirement for another subsidiary; each entity is treated independently.
• Multiple Subsidiaries in One Member State. If two subsidiaries (A and B) are active in the same Member State (e.g., France), both must designate a representative in that state. They can use the same representative for both entities.
• Different Member States. If subsidiaries are active in different Member States (e.g., A and B in France, C in Spain), each subsidiary must designate a representative in the respective state where it is active e.g. A and B both need to designate and register a representative in France independently (although it can be the same representative) while C needs to designate a representative in Spain.

“2.4.2 If an EU based company (A) has a daughter company - not a branch - (B) in a non-EU country with trading activity, is B required to designate a representative or will declaration to A’s NRA be sufficient to comply this obligation?”

• Independent Activity. Subsidiary B’s activity is independent of Subsidiary A’s, meaning B must follow its own compliance obligations, regardless of A’s status.
• Representative Designation. If Subsidiary B is trading REMIT-related products, it must designate a representative and register in the EU, even if its parent company (A) is established in the EU. Simply being part of an EU-established parent does not exempt B from this requirement.
• Option to Use Parent or Subsidiary as Representative. Subsidiary B may choose to appoint Subsidiary A as its representative if desired.
• No Need for Non-Trading Entities. If B is not trading REMIT-related products, it is not required to designate a representative or register in the EU.
• Established in EU. If Subsidiary A is trading REMIT-related products and already established in the EU, it only needs to register but does not require a representative. If A is not trading, it does not need to register.

“2.4.3 We are a non-EU company active in the physical and financial energy markets outside the EU. We are looking to expand our operation to Europe. We intend to do physical cross-border flows mostly on the explicit non-coupled borders. We will not own any assets.

2.4.3.1 Do we still need to have a representative in each country we will be trading on (buy and sell) even if we do not own any generation assets?

2.4.3.2 What are the qualifications for the representatives in each country? Do they have to be citizens of the country? Do they have to still be living in those countries?”

• Single Representative for Multiple Countries. A non-EU market participant trading in multiple EU countries does not need a representative in each country. One representative based in the EU is sufficient to comply with Article 9 of REMIT.
• Representative's Location. The representative must be designated in an EU Member State where the participant is active in the wholesale energy market.
• EU Residency Requirement. The representative must be either established or resident within the EU, but there is no requirement for them to be a citizen of or living in the specific Member State where they are designated.

“2.4.4 What is a way forward for non-EU RRMs? To open an EU-branch, or appoint (non- affiliated) a designated representative? Are both options available? In that case, could reporting be continued by the RRM or it has to be conducted by a designated representative?”

• Representative Not Applicable for Non-EU RRMs. The requirement to designate a representative under REMIT does not apply to non-EU Registered Reporting Mechanisms (RRMs).
• EU Establishment Requirement. Non-EU companies seeking authorization as an RRM under REMIT must be fully established in the EU, not simply appoint a representative.
• Establishment Definition. To qualify as established in the EU, non-EU RRMs must perform at least some of their reporting activities within the EU.
• Representative Appointment Insufficient. Merely appointing an EU-based representative will not fulfil the requirement for establishing a non-EU RRM within the EU.

Annex II: Obligations of PPAETs according to the revised REMIT

This Annex provides practical information concerning the obligations of PPAETs under the revised REMIT 2. It aims at enhancing the understanding of PPAETs on how to comply with the new requirements.

ACER provides an illustrated overview of entities referenced as PPAETs under REMIT 2 and provides further clarification on definitions of each.

Executive Summary

• The concept of PPAET, as outlined in REMIT 2, defines entities that professionally arrange or execute transactions in wholesale energy products. It includes categories such as Organised Market Places (OMPs), Trade Matching Systems, and Direct Electronic Access Providers (DEAs).
• PPATs refer to individuals or entities involved in the reception and transmission of orders in wholesale energy products, with specific criteria defining their classification.
• PPETs, meanwhile, execute transactions, either on their own account or for third parties, and have obligations under REMIT if they are involved in trading financial instruments.
• Both PPATs and certain PPETs are required to notify ACER and NRAs if they suspect potential breaches of Articles 3, 4, or 5 of REMIT.
• Notifications must be timely, with a four-week limit from the point of suspicion.
• ACER emphasizes that monitoring for Article 4 breaches (i.e. the obligation to publish inside information) must be active, reasonable, and proportionate, using only the information available to PPAETs.
• From 2025 onwards, ACER will release a public report on the effectiveness of PPAET arrangements and procedures, further fostering transparency in the energy markets.

Key Takeaways:

Section 1: The Concept of ‘PPAET’

The concept of ‘PPAET’.

• PPAET Definition. The revised REMIT 2 defines PPAETs as entities that professionally arrange or execute transactions in wholesale energy products.
• In-scope Entities. This category includes Organised Market Places (OMPs) e.g. Exchanges, Brokers, Energy Capacity Platforms, as well as Trade Matching Systems, and Direct Electronic Access Providers (DEAs).

The concept of ‘PPAT’. 

• PPAT Definition. A Person Professionally Arranging Transactions (PPAT) refers to any natural or legal person involved in the reception and transmission of orders in wholesale energy products. This role is a subset of the broader PPAET concept.
• Categories of PPATs. The main categories include Organised Market Places (OMPs), Trade Matching Systems, Order Book Providers, Direct Electronic Access Providers (DEAs), and other entities fulfilling similar roles.
• Three Criteria for PPAT Classification:

1. The entity must be a person (natural or legal);
2. It must be acting professionally, meaning the activity is part of its normal paid occupation; and
3. It must be involved in arranging transactions, i.e., facilitating the interaction of buying and selling interests in wholesale energy products to enable or assist third parties (third-party buying or selling) in a way that directly or indirectly brings about a particular wholesale energy transaction, and leads to transactions being concluded. This includes the reception and transmission of orders.

• Communication Platforms excluded from PPAT definition. Simply providing the means by which parties to a transaction (or a possible transaction) are able to communicate with each other is excluded from the concept of PPAT e.g. Internet service providers, e-mail service providers, messaging providers or telecommunication providers. However, if a person makes arrangements that go beyond providing the means of communication, and adds value to what is provided, it will no longer be excluded and shall be recognised as a PPAT.
• Case-by-Case Assessment. Whether an entity qualifies as a PPAT is determined on a case-by-case basis, depending on its role in the transaction process.
• Intermediary Role. The defining characteristic of a PPAT is its intermediary role in facilitating wholesale energy transactions by handling orders.
• Additional Considerations. The following elements should also be taken into consideration when evaluating whether a person is professionally arranging transactions:

1. The arranging activity can comprise the whole trade lifecycle or be restricted to one or more parts of it.
2. The number of PPATs involved in a transaction is irrelevant to determine whether an entity is a PPAT.
3. The nature of the PPAT’s legal form, ownership structure, market operations, type of wholesale energy product traded, and whether it enters or not directly into transactions are not relevant when determining whether an entity is a PPAT.

The concept of ‘PPET’

PPET Definition. A Person Professionally Executing Transactions (PPET) is defined as someone who is engaged in the execution of transactions in wholesale energy products, crucially either on their own account or on behalf of third parties.

• Scope of ‘Execution’. Execution includes both trading for oneself and executing orders for third parties, either directly or through a discretionary mandate given by a third party.
• Obligations Under REMIT. Not all PPETs are subject to obligations under Article 15 of REMIT. The obligations apply to those PPETs that also fall under Article 16 of MAR (Market Abuse Regulation) and are also involved in transactions in wholesale energy products that are not classified as financial instruments.
• Exclusion of Certain PPETs. PPETs that only execute transactions involving wholesale energy products that are not financial instruments are not subject to the obligations outlined in Article 15(2) of REMIT. ACER provides an illustration on page 15 outlining which PPETs have Article 15(2) obligations.
• Conditional Compliance. Compliance obligations are only triggered if the PPET engages in transactions involving financial instruments thereby falling within MAR’s scope.

Section 2: Notification obligations under Article 15

• Obligation to Notify. PPATs and a subset of PPETs must notify ACER and relevant NRAs if they suspect that an order or transaction may breach Articles 3, 4, or 5 of REMIT.
• Reasonable Suspicion. Notifications are required when there is a reasonable suspicion of a breach, including any cancellation or modification of an order, whether placed on or outside an OMP.
• Timely Reporting. Notifications must be made without delay and no later than four weeks from when the person becomes aware of the suspicious event.
• Best Practice. Even if not legally obligated, it is recommended as a best practice that all persons submit notifications of any potential breaches of REMIT they become aware of, fostering transparency and compliance.

 RegTrail Insights

The requirement to self-report when trading on own account remains controversial as firms will essentially be in a position of potential self-incrimination. Firm's will need to establish robust internal processes to quickly identify then thoroughly vet, with input from legal counsel, such qualifying transactions before handing them over to the regulators. 

Proportionality on the compliance with the notification obligation under Article 15

• Proportional Notification Practices. PPAETs must conduct notifications under Article 15 of REMIT 2 in a reasonable and proportionate manner, ensuring that their reporting practices are consistent with the new obligations.
• PPATs Notification Extension. PPATs should continue their regular notification practices and extend them to:

1. Wholesale energy products that are financial instruments (changes in Article 1(2) of REMIT 2), in case they arrange transactions on these products.
2. New categories of wholesale energy products (changes in Article 2(4) of REMIT 2) such as electricity, natural gas, or hydrogen storage contracts and derivatives related to day-ahead and intraday electricity coupling.
3. Suspected breaches of disclosure obligations under Article 4 of REMIT 2.

• PPETs Notification Obligations. For the first time, PPETs must report suspicious transactions or orders (STORs) on behaviours observed for both trading activities and available inside information to the PPET. This extends existing obligations under MAR.
• Existing Systems for PPETs. PPETs already adhering to MAR obligations should extend their existing procedures to cover REMIT-related breaches, especially for insider trading and market manipulation in energy markets.
• Recommended Practices for PPETs.

1. Develop internal procedures and training on REMIT 2 compliance.
2. Adopt of measures and systems to prevent and discover insider trading, market manipulation, and non-effective or non-timely disclosure of inside information.
3. Establish processes for assessing and reporting potential breaches including procedures on how to conduct an effective assessment to determine a reasonable suspicion for potential breaches of Articles 3, 4, or 5 (the full decision-making process should be traceable and key decision points should be recorded; these provisions should also cover data storage);
4. Create handbooks and procedures on how to write comprehensive and informative STORs.
5. Implement internal reporting procedures on how to report a STOR via the Notification Platform to ACER and to the relevant NRAs.

• Public Report in 2025. From 2025, ACER, in collaboration with NRAs, will release a public report on the effectiveness of PPAET arrangements, systems, and procedures.

Timeliness of the notifications

ACER provides an illustration on page 18 outlining detection and notification timelines:

• Timely Notifications. PPAETs are required to notify ACER and relevant NRAs as soon as they become aware of suspicious activity. Timeliness is critical for collecting relevant evidence and preventing further breaches.
• Four Week Limit. PPAETs have a maximum of four weeks from becoming aware of a suspicious event to gather all necessary information and submit a comprehensive notification.
• Variable Evaluation Timelines. The time needed to evaluate suspicious behaviour can vary. Simple events might require less time i.e., events involving one trading session, or for events that can be sufficiently elucidated without having to request third party information, but complex events may take longer, and PPAETs should be able to justify any delays if requested by ACER or the NRA.
• Internal Procedures. PPAETs must establish clear internal procedures to determine when an event is suspicious, how to notify ACER and NRAs, and ensure that surveillance personnel remain independent and free of conflicts of interest.
• Substantiated Notifications. Notifications must be sufficiently substantiated with meaningful information to help ACER and NRAs review the suspicious behaviour. PPAETs are encouraged to submit any additional information discovered after the initial notification.
• System Alerts Screening. Alerts generated by systems should go through human screening, ensuring data quality and that circumstantial information is included before submitting them as STORs to ACER and the NRAs.

Means and recipients of the notifications

• Notification Recipients. PPAETs are required to notify both ACER and the relevant NRAs. The NRAs to be notified are:

1. The NRA(s) from the Member State(s) where the wholesale energy product(s) are delivered; and
2. The NRA(s) from the Member State(s) where the involved market participant(s) are registered.

• ACER Notification Platform. ACER has a secure online Notification Platform (click here) that allows PPAETs to submit notifications (such as STORs) directly and simultaneously to ACER and the relevant NRAs in a standardized manner.
• Immediate Confirmation. The Notification Platform provides immediate confirmation to the notifying PPAET, ensuring legal certainty that the notification has been received.
• Direct Notification Required. Any communication with NRAs outside the platform does not replace the need for submitting the STOR through ACER’s official Notification Platform, reinforcing the importance of using the standardized system for compliance.

Notifications of potential Article 4 breaches

• Article 4 Breach Monitoring. The revised REMIT 2 regulation now explicitly requires monitoring for potential breaches of Article 4 (i.e. the obligation topublish inside information), in addition to breaches of Articles 3 and 5. ACER emphasizes that Article 4 monitoring must be an active process, not a secondary outcome or ‘side product’ of other monitoring activities.
• Reasonable and Proportionate Monitoring. ACER expects PPAETs to monitor for Article 4 breaches in a reasonable and proportionate way, using only the information available to them and without exceeding their capacity or scope.
• PPAT Responsibilities. PPATs are expected to fulfil their obligations by focusing on information available from Inside Information Platforms and monitoring the activities of market participants whose transactions they arrange, especially if these participants are managed by the PPAT or part of the same group.
• PPET Responsibilities. PPETs are not required to actively monitor all market participant disclosures. Their monitoring obligations are limited to information directly related to their own activities, in line with Articles 15(2) and 15(3) of REMIT.