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Electricity Marketplaces

  • Chapter
EU Electricity Trade Law

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Abstract

Competitive electricity markets can be structured in two basic ways. Electricity trading can be direct (bilateral) or centralised (exchanges and other organised marketplaces). This chapter focuses on the latter. OTC contracts are discussed later in this book.

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Notes

  1. 1.

    Krause T (2003), p. 4.

  2. 2.

    Meller E and Walter B (2009), § 9, number 8.

  3. 3.

    See Midttun A et al. (2001), p. 23; Thomas S (2001), p. 76.

  4. 4.

    Formerly known as the International Petroleum Exchange (IPE), its name was changed after it was taken over by IntercontinentalExchange, Inc. (ICE). See, for example, Däuper O (2009), § 3, number 23.

  5. 5.

    For an introduction to EEX, see, for example, CFTC letter No. 04-33 dated 25 October 2004 (in response to a no-action request).

  6. 6.

    EEX Exchange Rules (0031b, 22 November 2014), section 2(2).

  7. 7.

    See, for example, Hünerwadel A (2007), p. 53; Karas J and Sulamaa P (2013), chapter 2.

  8. 8.

    Case COMP/AT.39952—Power Exchanges, C(2014) 1204 final.

  9. 9.

    Recital 14 of Commission Regulation …/.. (CACM Regulation). See also recitals 20 and 25–26.

  10. 10.

    Article 7(4) of Commission Regulation …/.. (CACM Regulation).

  11. 11.

    Ostrom E (2005), p. 835. The set of rules consists of position rules, boundary rules, authority rules, scope rules, aggregation rules, information rules, and payoff rules.

  12. 12.

    See Sioshansi FP (2008). See also Hogan WW (2010); Green R (2010); Hogan WW (2009).

  13. 13.

    Kindler J (2008).

  14. 14.

    U.S. Energy Information Administration (2002), Chapter 4.

  15. 15.

    Hunt S and Shuttleworth G (1996), p. 156.

  16. 16.

    Point (d) of Article 12 of Directive 2009/72/EC (Third Electricity Directive). See also Article 15(1) on dispatching the generating installations and Article 15(7) on rules for balancing the electricity system.

  17. 17.

    See, for example, Article 3(4) of Directive 2009/72/EC (Third Electricity Directive).

  18. 18.

    Ibid.

  19. 19.

    U.S. Energy Information Administration (2002), Chapter 4: “Barriers to the development of the electricity derivatives market are numerous: * The physical supply system is still encumbered by a 50-year-old legacy of vertical integration. * Electricity markets are subject to Federal and State regulations that are still evolving. * As a commodity, electricity has many unique aspects, including instantaneous delivery, non-storability, an interactive delivery system, and extreme price volatility. * The complexity of electricity spot markets is not conducive to common futures transactions. * There are also substantial problems with price transparency, modeling of derivative instruments, effective arbitrage, credit risk, and default risk”.

  20. 20.

    U.S. Energy Information Administration (2002), Chapter 4.

  21. 21.

    Godager K (2009), § 18, number 4: “Based on the market share of the groups of participants at Nord Pool it seems that approximately 1/3 of the market participants are producers, 1/3 are retailers and 1/3 are institutions without natural connection to the physical electricity business”.

  22. 22.

    U.S. Energy Information Administration (2002), Chapter 4.

  23. 23.

    Godager K (2009), § 18, number 25.

  24. 24.

    See, for example, Hünerwadel A (2007), p. 58.

  25. 25.

    For definitions, see point 24 (trading venue), point 21 (regulated market), point 22 (MTF) and point 23 (OTF) of Article 4(1) of Directive 2014/65/EU (MiFID II).

  26. 26.

    Point 19 of Article 4(1) of Directive 2014/65/EU (MiFID II).

  27. 27.

    For US law, see 7 U.S.C. § 1a(37).

  28. 28.

    Section C of Annex to Directive 2014/65/EU (MiFID II): “… (4) … derivative contracts … which may be settled physically or in cash; (5) derivative contracts … that must be settled in cash or may be settled in cash at the option of one of the parties … (6) derivative contracts … that can be physically settled provided that they are traded on a regulated market, a MTF, or an OTF, except for wholesale energy products traded on an OTF that must be physically settled; (7) … derivative contracts relating to commodities, that can be physically settled not otherwise mentioned in point 6 of this Section and not being for commercial purposes, which have the characteristics of other derivative financial instruments; … (11) Emission allowances consisting of any units recognised for compliance with the requirements of Directive 2003/87/EC (Emissions Trading Scheme)”.

  29. 29.

    Article 28(1) of Regulation 600/2014 (MiFIR).

  30. 30.

    Article 28(1)(d) of Regulation 600/2014 (MiFIR).

  31. 31.

    Article 28(2) of Regulation 600/2014 (MiFIR).

  32. 32.

    7 USC § 6(a).

  33. 33.

    duPont JC (2009), p. 865.

  34. 34.

    7 USC § 6(a).

  35. 35.

    7 USC §2(h)(8). See also 15 USC §78c-3(h) on clearing for security-based swaps.

  36. 36.

    17 CFR § 35.2 exempts swap agreements from regulation under the CEA provided they are entered into by eligible swap participants, are customized agreements, the creditworthiness of a party subject to the contract was a material consideration in determining the terms of the agreement, and the agreement was not entered into and traded on or through a multilateral transaction facility.

  37. 37.

    Article 4(1) of Regulation 648/2012 (EMIR).

  38. 38.

    Recital 33 and points 14–15 of Article 2 of Regulation 648/2012 (EMIR).

  39. 39.

    7 USC § 6(a).

  40. 40.

    7 USC §2(h)(1)(A) and 7 USC §2(h)(2)(A)(i).

  41. 41.

    Section 723(a)(3) of the Dodd-Frank Act.

  42. 42.

    7 USC § 2(h)(1)(D)(ii).

  43. 43.

    7 USC § 2(h)(8)(A).

  44. 44.

    Godager K (2009), § 18, number 29.

  45. 45.

    Godager K (2009), § 18, number 28.

  46. 46.

    Godager K (2009), § 18, number 30.

  47. 47.

    In German law, it is traditionally distinguished between the firm (das Unternehmen) and the legal entity as its carrier (Unternehmensträger).

  48. 48.

    This is reflected in EU law as well. Point 18 of Article 4(1) of Directive 2014/65/EU (MiFID II): “‘market operator’ means a person or persons who manages and/or operates the business of a regulated market and may be the regulated market itself”.

  49. 49.

    Article 5(1) of Directive 2014/65/EU (MiFID II). Section A of Annex I to Directive 2014/65/EU (MiFID II): “Investment services and activities … (8) Operation of an MTF; (9) Operation of an OTF”. Article 5(2) of Directive 2014/65/EU (MiFID II): “By way of derogation from paragraph 1, Member States shall authorise any market operator to operate an MTF or an OTF, subject to the prior verification of their compliance with this Chapter”. For regulated markets, see Article 44 of Directive 2014/65/EU (MiFID II).

  50. 50.

    For German law, see § 4(1) BörsG: “Die Errichtung einer Börse bedarf der schriftlichen Erlaubnis der Börsenaufsichtsbehörde. “For the nature of an exchange, see § 2(1), § 5(1) and § 2(5) BörsG.

  51. 51.

    § 33(1) of lov om regulerte markeder (børsloven, Act on Exchanges), § 33(1): “Virksomhet som børs kan bare drives av foretak som har tillatelse til dette fra departementet. Foretak som ikke har tillatelse som børs etter denne lov, kan ikke benytte betegnelsen børs i eller som tillegg til sitt navn, eller ved omtale av sin virksomhet, dersom bruken er egnet til å gi inntrykk av at foretaket har tillatelse etter denne loven”.

  52. 52.

    Annotated presentation of regulated markets and national provisions implementing relevant requirements of MiFID (Directive 2004/39/EC of the European Parliament and of the Council), OJ C 209, 15.7.2011, pp. 21–28.

  53. 53.

    § 1 of lov om tilsynet med finansinstitusjoner mv. (finanstilsynsloven).

  54. 54.

    NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 1.2; NASDAQ OMX Oslo ASA and NASDAQ OMX Clearing AB, Trading Appendix 1/Clearing Appendix 1, Definitions, Commodity Derivatives (7 April 2014).

  55. 55.

    NASDAQ OMX, press release of 21 August 2013.

  56. 56.

    NASDAQ OMX, Trading Appendix 1/Clearing Appendix 1, Definitions, Commodity Derivatives (7 April 2014): “Clearinghouse means NASDAQ OMX Clearing AB, a Swedish company with reg. no 556383-9058 in the Swedish company register, acting through its Norwegian branch NASDAQ OMX Oslo NUF with reg. no 994 583 352 in the Norwegian company register”.

  57. 57.

    Article 14(1) of Regulation 648/2012 (EMIR): “Where a legal person established in the Union intends to provide clearing services as a CCP, it shall apply for authorisation to the competent authority of the Member State where it is established (the CCP’s competent authority), in accordance with the procedure set out in Article 17”.

  58. 58.

    Under sections 288 and 292 of the Financial Services and Markets Act 2000 (FSMA).

  59. 59.

    Article 14(2) of Regulation 648/2012 (EMIR). Article 14(5) of Regulation 648/2012 (EMIR): “Authorisation referred to in paragraph 1 shall not prevent Member States from adopting or continuing to apply, in respect of CCPs established in their territory, additional requirements including certain requirements for authorisation under Directive 2006/48/EC”.

  60. 60.

    § 2 BörsG.

  61. 61.

    EEX Exchange Rules (0031b, 22 November 2014), § 2(1): “EEX AG is operating the exchange. EEX AG operates the EEX Power Derivatives Market through EEX Power Derivatives GmbH, EEX Gas Market through EGEX European Gas Exchange GmbH and EEX Emission Market through Global Environmental Exchange GmbH. EEX AG itself is operating EEX Coal Market”. See also § 1(1): “These Exchange Rules govern the organisation of the Spot and Commodity Derivatives Exchange, the European Energy Exchange (EEX) with the following lines of business: – Sub-market of EEX Power Derivatives Market for derivatives trading in Power, – Sub-market of EEX Gas Market for spot and derivatives trading in natural gas, – Sub-market of EEX Emission Market for spot and derivatives trading in emission rights, – Sub-market of EEX Coal Market for derivatives trading in Coal”.

  62. 62.

    § 3(1) BörsG; Annotated presentation of regulated markets and national provisions implementing relevant requirements of MiFID (Directive 2004/39/EC of the European Parliament and of the Council), OJ C 209, 15.7.2011, pp. 21–28.

  63. 63.

    § 14 WpHG (insider trading) and § 20a WpHG (market manipulation).

  64. 64.

    EPEX Spot Exchange Rules (13 May 2014), Article 1.5: “European Commodity Clearing AG has been designated by EPEX Spot SE as the Clearing House of the Exchange. As the Clearing House it acts as the Central Counterparty for Payment and Delivery of the contracts traded or registered at the Exchange. The rules and proceedings of ECC are stated in the ECC Clearing Conditions in its current version.

    Clearing Houses are credit institutions that handle the clearing of Contracts traded on EPEX Spot, in accordance with the specific procedures for each type of Product. In a given Market Segment, the Clearing House operates under the terms of an agreement signed with the Clearing Members designated by the Exchange Members”.

  65. 65.

    § 1(1) of the Banking Act (KWG, Kreditwesengesetz): “Kreditinstitute sind Unternehmen, die Bankgeschäfte gewerbsmäßig oder in einem Umfang betreiben, der einen in kaufmännischer Weise eingerichteten Geschäftsbetrieb erfordert. Bankgeschäfte sind … 12. die Tätigkeit als zentraler Kontrahent im Sinne von Absatz 31”. § 1(31) KWG: “Ein zentraler Kontrahent ist ein Unternehmen, das bei Kaufverträgen innerhalb eines oder mehrerer Finanzmärkte zwischen den Käufer und den Verkäufer geschaltet wird, um als Vertragspartner für jeden der beiden zu dienen, und dessen Forderungen aus Kontrahentenausfallrisiken gegenüber allen Teilnehmern an seinen Systemen auf Tagesbasis hinreichend besichert sind”.

  66. 66.

    Ibid.

  67. 67.

    The Financial Services Authority (FSA) used to be the sole body responsible for financial services regulation in the UK. On 1 April 2013, a new system came into effect. The FSA was replaced by two new regulators: the Financial Conduct Authority (FCA); and the Prudential Regulation Authority (PRA).

  68. 68.

    Murray JV (2009), pp. 320–322; Markham JW and Harty DJ (2008), p. 921; Diaz-Rainey I et al. (2011).

  69. 69.

    Annotated presentation of regulated markets and national provisions implementing relevant requirements of MiFID (Directive 2004/39/EC of the European Parliament and of the Council), OJ C 209, 15.7.2011, pp. 21–28.

  70. 70.

    Regulation 1031/2010 (Auctioning Regulation).

  71. 71.

    Recital 34 of Regulation 1031/2010 (Auctioning Regulation).

  72. 72.

    Recital 7 and Article 26 of Regulation 1031/2010 (Auctioning Regulation).

  73. 73.

    Article 30 of Regulation 1031/2010 (Auctioning Regulation).

  74. 74.

    Article 53(1) of Directive 2014/65/EU (MiFID II). See also Article 53(2) of Directive 2014/65/EU (MiFID II): “The rules referred to in paragraph 1 shall specify any obligations for the members or participants arising from: (a) the constitution and administration of the regulated market; (b) rules relating to transactions on the market; (c) professional standards imposed on the staff of the investment firms or credit institutions that are operating on the market; (d) the conditions established, for members or participants other than investment firms and credit institutions, under paragraph 3; (e) the rules and procedures for the clearing and settlement of transactions concluded on the regulated market”.

  75. 75.

    Article 53(5) of Directive 2014/65/EU (MiFID II).

  76. 76.

    Article 37 of Directive 2014/65/EU (MiFID II).

  77. 77.

    See recital 14 and Article 19(2) of Directive 2014/65/EU (MiFID II).

  78. 78.

    Article 53(3) of Directive 2014/65/EU (MiFID II).

  79. 79.

    For Swiss law, see Hünerwadel A (2007), p. 59. See Art. 37 BEHG and Art. 14 BEHV (authorisation for foreign exchanges). Art. 2 letter B and Art. 7 BEHG (regulated access to trading).

  80. 80.

    See, for example, 7 USC § 6d(f)(1) on the registration requirement for dealing in swaps.

  81. 81.

    7 U.S.C. §§6d(f) and 6 s(a) and 15 U.S.C. §§ 78c-5(a) and 78o-8(a).

  82. 82.

    7 U.S.C. §1a and 15 U.S.C. §78c.

  83. 83.

    7 U.S.C. §6 s and 15 U.S.C. §78o-8.

  84. 84.

    For counterparty corporate risk, see Mäntysaari P (2010b), section 6.2.

  85. 85.

    Article 132(1) and second subparagraph of Article 132(4) of Directive 2009/138/EC (Solvency II) (recast).

  86. 86.

    Articles 12 and 13 of Regulation 236/2012 (on short selling and certain aspects of credit default swaps).

  87. 87.

    See recital 10 of Regulation 236/2012 (on short selling and certain aspects of credit default swaps).

  88. 88.

    Article 1(1) of Regulation 236/2012 (on short selling and certain aspects of credit default swaps): “This Regulation shall apply to the following: (a) financial instruments … (b) derivatives … that relate to a financial instrument …” Article 1(2) of Regulation 236/2012 (on short selling and certain aspects of credit default swaps): “Articles 18, 20 and 23 to 30 shall apply to all financial instruments within the meaning of point (a) of Article 2(1)”. Article 2(1) of Regulation 236/2012 (on short selling and certain aspects of credit default swaps): “For the purpose of this Regulation, the following definitions apply: (a) ‘financial instrument’ means an instrument listed in Section C of Annex I to Directive 2004/39/EC; …”

  89. 89.

    See, for example, IMF (2013), Chapter 2: “Finally, as regards policy, the results do not justify the recent ban imposed in Europe on uncovered purchases of SCDS, as it may result in unintended consequences that could negatively affect market liquidity and cause dislocations in other markets. The regulatory reforms underway for over-the-counter (OTC) derivatives generally represent a better avenue to countering any deleterious effects of SCDS markets”.

  90. 90.

    See Article 2(1)(b) of Regulation 236/2012 (on short selling and certain aspects of credit default swaps).

  91. 91.

    Article 1(1) of Regulation 600/2014 (MiFIR): “This Regulation establishes uniform requirements in relation to the following: … (e) product intervention powers of competent authorities, ESMA and EBA and powers of ESMA on position management controls and position limits; …”

  92. 92.

    7 USC § 1a(18).

  93. 93.

    CESR and ERGEG advice to the European Commission in the context of the Third Energy Package: Responses to the fact-finding questions of the mandate C.1–C.3 and E.12–E.17 (CESR/08–527) (July 2008), C.1: “… The majority of countries (22) indicated that there are no undertakings which are active in supply of electricity and at the same time have a license of an investment firm. In case that there are such companies the numbers are relatively low …”

  94. 94.

    ISDA (2003), p. 9: “A large proportion of Enron’s losses were the result of trying to reconcile two conflicting strategies: one was to invest in energy, telecommunications, and other technology businesses, which required substantial debt; the second was to grow into a major dealer in swaps, which required substantial creditworthiness”.

  95. 95.

    For definitions, see points 1 (CCP), 14 (clearing member) and 15 (client) of Article 2 of Regulation 648/2012 (EMIR).

  96. 96.

    Pilgram T (2010), p. 379, point 697.

  97. 97.

    Section A of Annex I to Directive 2014/65/EU (MiFID II): “(1) Reception and transmission of orders in relation to one or more financial instruments; (2) Execution of orders on behalf of clients; (3) Dealing on own account …”

  98. 98.

    See, for example, recital 33 and Articles 1(2), 4(3), 2(14), and 2(15) of Regulation 648/2012 (EMIR); Articles 29(2) and 30(1) of Regulation 600/2014 (MiFIR); Article 17(6) of Directive 2014/65/EU (MiFID II).

  99. 99.

    Commission Delegated Regulation (EU) No 149/2013 of 19 December 2012 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council with regard to regulatory technical standards on indirect clearing arrangements, the clearing obligation, the public register, access to a trading venue, non-financial counterparties, and risk mitigation techniques for OTC derivatives contracts not cleared by a CCP.

  100. 100.

    Article 5(1) of Directive 2014/65/EU (MiFID II) and recital 28 of Directive 2004/39/EC (MiFID).

  101. 101.

    Articles 41(1), 42 and 43(1) of Regulation 648/2012 (EMIR). See also recital 65.

  102. 102.

    Article 41(3) of Regulation 648/2012 (EMIR). See, for example, NASDAQ OMX, General Terms, Clearing Rules, Commodity Derivatives (7 April 2014), section 5.1.1: “The Clearinghouse determines the Margin Requirement(s) for each Account Holder on each Bank Day …”

  103. 103.

    EEX Exchange Rules (0031b, 22 November 2014), section 4.3. See also Härle PA (2010), p. 406, points 747–748.

  104. 104.

    EEX Exchange Rules (0031b, 22 November 2014), § 30(1).

  105. 105.

    Point 15 of Article 2 of Regulation 648/2012 (EMIR).

  106. 106.

    Point 9 of Article 4(1) of 2014/65/EU Directive 2014/65/EU (MiFID II): “‘Client’ means any natural or legal person to whom an investment firm provides investment or ancillary services”.

  107. 107.

    Article 2(1) of Directive 2004/39/EC (MiFID): “This Directive shall not apply to: … (l) firms which provide investment services and/or perform investment activities consisting exclusively in dealing on own account on markets in financial futures or options or other derivatives and on cash markets for the sole purpose of hedging positions on derivatives markets or which deal for the accounts of other members of those markets or make prices for them and which are guaranteed by clearing members of the same markets, where responsibility for ensuring the performance of contracts entered into by such firms is assumed by clearing members of the same markets; …”

  108. 108.

    Point (j)(i) of Article 2(1) of Directive 2014/65/EU (MiFID II).

  109. 109.

    Point (b) of Article 2(1) of Directive 2014/65/EU (MiFID II).

  110. 110.

    Point (d) of Article 3(1) of Directive 2014/65/EU (MiFID II). See also recital 29 of Directive 2014/65/EU (MiFID II).

  111. 111.

    Point (e) of Article 3(1) of Directive 2014/65/EU (MiFID II). See also recital 29 of Directive 2014/65/EU (MiFID II).

  112. 112.

    Point (a) of Article 3(1) of Directive 2014/65/EU (MiFID II).

  113. 113.

    Section A of Annex I to Directive 2014/65/EU (MiFID II): “(1) Reception and transmission of orders in relation to one or more financial instruments; (2) Execution of orders on behalf of clients; (3) Dealing on own account …”

  114. 114.

    Pilgram T (2010), pp. 384–385, points 706–707.

  115. 115.

    Ofgem (2009), para 3.75: “It has been suggested that it can take up to 18 months for sufficient GTMAs to be negotiated with enough counterparties to allow a new entrant into the market to start trading. Conversely, where liquid forward and futures markets exist a non-physical player will only need to sign effectively one GTMA to participate on the exchange and can therefore enter and start trading almost immediately”.

  116. 116.

    Point 2 of Regulation 648/2012 (EMIR).

  117. 117.

    Ofgem (2009), paras 3.90 and 3.92.

  118. 118.

    See, for example, Meller E and Walter B (2009), § 9, number 19.

  119. 119.

    Points 1 and 3 of Article 2 of Regulation 648/2012 (EMIR).

  120. 120.

    Points 32 and 36 of Article 3 of Regulation 1031/2010 (Auctioning Regulation). See also 7 USC § 1a(15)(A).

  121. 121.

    ECC Clearing Conditions (0022a, 30 April 2014), 1 Definition of Terms.

  122. 122.

    NASDAQ OMX, Trading Appendix 1/Clearing Appendix 1, Definitions, Commodity Derivatives (7 April 2014).

  123. 123.

    European Code of Conduct for Clearing and Settlement (7 November 2006), para 39: “Organisations shall unbundle prices and services at least as follows (i) The services of trading venues, CCPs and CSDs will be unbundled from each other. (ii) Each CSD will unbundle the following services each from the other: a. Account provision, establishing securities in book entry form, and asset servicing; b. Clearing and settlement (including verification); c. Credit provision; d. Securities lending and borrowing; and e. Collateral management”.

  124. 124.

    Points 1 and 3 of Article 2 of Regulation 648/2012 (EMIR).

  125. 125.

    Article 4(1) of Regulation 648/2012 (EMIR).

  126. 126.

    7 USC § 1a(37).

  127. 127.

    7 USC § 1a(18).

  128. 128.

    Point 3 of Article 2 of Regulation 648/2012 (EMIR).

  129. 129.

    See NASDAQ OMX Oslo ASA, Exchange Membership Agreement, Commodity Derivatives (December 2010), section 1.

  130. 130.

    The clearing-related agreements included the following agreements in June 2012: General Clearing Membership Agreement; Clearing Membership Agreement; Clearing Client Agreement; EUR Settlement Bank Agreement; EUR Security collateral Agreement; EUR Bank Guarantee; GBP Collateral Security Deed; GBP Letter of Credit; GBP Bank Guarantee; GBP Settlement Account Instructions; Broker Agreement.

  131. 131.

    NASDAQ OMX Oslo ASA, General Terms, Trading Rules, Commodity Derivatives (7 April 2014), section 14.1; NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 18.1.

  132. 132.

    Nord Pool Spot, General Terms, Trading Rules, Nord Pool Spot’s Physical Markets (effective from NWE/PCR Go-live 2013), section 18.1.1.

  133. 133.

    ECC Clearing Conditions (0022a, 30 April 2014), section 6.4(1).

  134. 134.

    ECC Clearing Conditions (0022a, 30 April 2014), section 6.4(1).

  135. 135.

    EEX Exchange Rules (0031b, 22 November 2014).

  136. 136.

    Point 1 of Article 2 of Regulation 648/2012 (EMIR). In the US, any clearing agency that clears or settles securities transactions is required to register with the SEC under section 17A of the Securities Exchange Act of 1934.

  137. 137.

    EEX Trading Conditions (0038a, 22 November 2014), § 7(2).

  138. 138.

    ECC Clearing Conditions (0024a, 1 August 2014), § 3.3.1(2): “According to the more detailed definition provided in section 3.3.3, spot market transactions on the markets are concluded between ECC and ECC Lux and between ECC Lux and the Trading Participant at the same time. In deviation of the above neither ECC nor ECC Lux becomes a contractual party to the PXE spot market transactions. These transactions are being concluded between the Trading Participants and a counterparty (Energy Clearing Company a.s. – EnCC) commissioned by PXE. EnCC is a Clearing Entity according to section 2.6”. ECC Clearing Conditions (0024a, 1 August 2014), section 1: “PXE. Power Exchange Central Europe a.s. is a market on which derivatives market transactions are traded or registered. Spot market transactions of PXE Trading Participants are traded on the common day-ahead market of PXE and OTE (‘PXE Spot Market Transactions’)”.

  139. 139.

    Article 53(5) of 2014/65/EU (MiFID II). See Article 42(5) of Directive 2004/39/EC (MiFID).

  140. 140.

    Article 37(1) of Directive 2014/65/EU (MiFID II).

  141. 141.

    Recital 33 of Regulation 648/2012 (EMIR). See Article 4(3) of Regulation 648/2012 (EMIR). See also ISDA (2011).

  142. 142.

    Articles 2–5 of Regulation 149/2013 (supplementing Regulation 648/2012).

  143. 143.

    Article 2(1) of Regulation 149/2013 (supplementing Regulation 648/2012).

  144. 144.

    Article 4(1) of Regulation 149/2013 (supplementing Regulation 648/2012).

  145. 145.

    NASDAQ OMX, Trading Appendix 1/Clearing Appendix 1, Definitions, Commodity Derivatives (7 April 2014): “Settlement means that cash payment is made and received between the Counterparties, against Delivery and receipt of the relevant asset where applicable, in fulfilment of the Counterparties’ respective obligations pursuant to one or more Clearing Transactions”.

  146. 146.

    For a definition, see points 36 and 37 of Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  147. 147.

    Lov om tilsynet med finansinstitusjoner mv. (finanstilsynsloven), § 1.

  148. 148.

    Lov om verdipapirhandel (verdipapirhandelloven), § 2–6 (section 2–6 of the Securities Trading Act).

  149. 149.

    EEX Trading Conditions (0038a, 22 November 2014), § 7(2).

  150. 150.

    See points 31 and 36 of Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  151. 151.

    European Code of Conduct for Clearing and Settlement (7 November 2006).

  152. 152.

    Article 41 of Regulation 648/2012 (EMIR).

  153. 153.

    For a definition, see point 33 of Article 3 of Regulation 1031/2010 (Auctioning Regulation).

  154. 154.

    Ofgem (2009), para 3.88.

  155. 155.

    Godager K (2009), § 18, numbers 18 and 20.

  156. 156.

    Article 46(1) and recital 66 of Regulation 648/2012 (EMIR).

  157. 157.

    First subparagraph of Article 46(3) of Regulation 648/2012 (EMIR); Conditions applicable to financial instruments, bank guarantees and gold considered as highly liquid collateral, Annex I to Regulation 153/2013 (supplementing Regulation 648/2012).

  158. 158.

    Articles 38 and 39 of Regulation 153/2013 (supplementing Regulation 648/2012). See also recital 66 of Regulation 648/2012 (EMIR).

  159. 159.

    Article 40 of Regulation 153/2013 (supplementing Regulation 648/2012).

  160. 160.

    Article 40 of Regulation 153/2013 (supplementing Regulation 648/2012).

  161. 161.

    Article 42 of Regulation 153/2013 (supplementing Regulation 648/2012).

  162. 162.

    Recital 4 of Regulation 648/2012 (EMIR).

  163. 163.

    Article 62 of Regulation 153/2013 (supplementing Regulation 648/2012).

  164. 164.

    Recital 43 of Regulation 153/2013 (supplementing Regulation 648/2012).

  165. 165.

    See Godager K (2009), § 18, number 25 for differences between markets in 2009: “Settlement period. In European electricity derivatives markets outside the Nordic area the settlement period from actual delivery to final settlement may be long. With financial settlement this is no big issue, but if some of the participants pay for the positions in the electricity derivatives markets with income from sold physical electricity in the electricity spot market then the participants may become short of liquidity. In Norway the settlement period of the physical spot contracts is normally a couple of days, but for instance in Germany the settlement period may be up to several weeks. With physical delivery this means that the CCP must include the settlement period risk as a part of the settlement risk for the financial instruments”.

  166. 166.

    NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 6.2.1.

  167. 167.

    See, for example, Godager K (2009), § 18, numbers 20, 23, and 24.

  168. 168.

    Directive 98/26/EC (Directive on settlement finality).

  169. 169.

    Directive 2002/47/EC (Directive on financial collateral arrangements).

  170. 170.

    See, for example, Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Bidding Area means a sub area of the Electricity Exchange Area defined by the TSOs. The Electricity Exchange area is divided into bidding areas in order to handle transmission constraints. Participants must make Orders according to where their production or consumption is physically connected in the grid thus specifying the bidding area for each Order”.

  171. 171.

    EPEX Spot Exchange Rules (13 May 2014), Article 1.1.

  172. 172.

    Nord Pool Spot, Exchange information, No. 02/2014, 16 January 2014:” Nord Pool Spot has secured its position as Europe’s largest power market with the announcement of new volume and market share records in 2013. The year saw 493 TWh of power traded, compared to 432 TWh in 2012. Nord Pool Spot’s traded power volumes include the Nordic and Baltic day-ahead auction Elspot (348.9 TWh), the Nordic, Baltic and German intraday market Elbas (4.2 TWh) and day-ahead auction volume in the UK power market N2EX (139.4 TWh). At the same time Nord Pool Spot’s Nordic/Baltic market share reached an all-time high of 84 %”.

  173. 173.

    Iceland is the only Nordic country that does not belong to the Nord Pool Spot area. The distance between Iceland and Norway/Denmark is long. See nevertheless Nord Pool Spot, Annual Review 2007, p. 8: “Iceland. Nord Pool Spot is supporting Landsnet in the establishment of a market place for electricity trading in Iceland. The market will be based on continuous trading and use of the Elbas system”.

  174. 174.

    Energy Market Authority, Finland (2013), pp. 35–39; Energy Market Authority, Finland (2014), p. 8.

  175. 175.

    Energy Market Authority, Finland (2013), p. 31.

  176. 176.

    Pilgram T (2010), p. 343, point 632.

  177. 177.

    Nord Pool Spot, Exchange information, No. 44/2014, 4 November 2014.

  178. 178.

    Nord Pool Spot, Exchange information, No. 24/2014, 19 May 2014.

  179. 179.

    Nord Pool Spot Physical Markets, Trading Appendix 3, Product Specifications (1 July 2014), section 3.1. For the reason of the difference between the markets, see Nord Pool Spot, Exchange information, No 23/2014, 15 May 2014: “This is because TSOs need to reach a comprehensive overview of planning for the next day after nomination deadline for day-ahead trading. Order series for delivery the following day will thus be closed for trading in Elbas in this time interval”.

  180. 180.

    Nord Pool Spot, Exchange information, No. 44/2014, 4 November 2014. Nord Pool Spot Physical Markets, Trading Appendix 3, Product Specifications (launch of Elbas4), section 3.1.

  181. 181.

    First subparagraph of Article 4(1) of Directive 2014/65/EU (MiFID II): “The following definitions shall also apply: (1) ‘investment firm’ means any legal person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis”. See also Section A of Annex I relating to any of the instruments listed in Section C of Annex I: “… (8) Operation of an MTF; (9) Operation of an OTF”.

  182. 182.

    EPEX Spot Exchange Rules (13 May 2014), Articles 1.2 and 1.20.

  183. 183.

    Powernext SA, which owns 50 % of shares in EPEX Spot SE, is supervised by the Autorité des Marchés Financiers (AMF) and the Commission de Régulation de l’Energie (CRE) in addition to Direction Générale de l’Energie et du Climat (DGEC) and Banque de France and Commission Bancaire.

  184. 184.

    Powernext SA is the operator of Powernext in the French market. Powernext is approved as a multilateral trading facility and is cleared by the ECC.

  185. 185.

    Sections 4–1 and 4–5 of energiloven (the Energy Act, Act nr 50 of 29 June 1990).

  186. 186.

    Sections 4–2 (export and import) and 2–1 (authorisation requirement) of energiloven.

  187. 187.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), Section 1.1: “NPS operates the N2EX Physical Market, which is a market place for Trading of electricity contracts with physical delivery”. Section 1.2: “The Physical Market comprises the Prompt Market, the Auction Market and the Spot Market …”

  188. 188.

    Sections 4–1 and 4–5 of energiloven (the Energy Act).

  189. 189.

    See, for example, Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.3.

  190. 190.

    See, for example, Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 5.1.

  191. 191.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 5.2.3.

  192. 192.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.1.3.

  193. 193.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.1.4.

  194. 194.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.5.

  195. 195.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.11. See also ECC Clearing Conditions (0022a, 30 April 2014), section 2.3.1(1)(c) and section 5.2.3(3).

  196. 196.

    See also Härle PA (2010), p. 406, points 749–750.

  197. 197.

    EEX Exchange Rules (0031b, 22 November 2014), § 15(3).

  198. 198.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 2.2.1.

  199. 199.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 2.2.2.

  200. 200.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.11. See also ECC Clearing Conditions (0022a, 30 April 2014), section 2.3.1(1)(c) and section 5.2.3(3).

  201. 201.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 7.1.1.

  202. 202.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 6.

  203. 203.

    EPEX Spot Exchange Rules (28 November 2014), Article 5.4 and Article 5.6.

  204. 204.

    EPEX Spot Exchange Rules (28 November 2014), Article 5.7.

  205. 205.

    EPEX Spot Exchange Rules (28 November 2014), Article 5.4.

  206. 206.

    Hunt S and Shuttleworth G (1996), pp. 139–140.

  207. 207.

    EPEX Spot Exchange Rules (28 November 2014), Article 1.7; EPEX Spot Operational Rules (28 November 2014), Article 1.8.

  208. 208.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 7.1.2.

  209. 209.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 8.1.2.

  210. 210.

    For definitions, see Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014).

  211. 211.

    See, for example, NASDAQ OMX, Trading Appendix 2/Clearing Appendix 2, Contract Specifications, Commodity Derivatives (24 November 2014), Part B, section 1.2.1: “… Area Price means, for the applicable time of reference, the price of one (1) MWh of electric power for the applicable Electricity Area”. “Electricity Area means a geographical area in which Nord Pool Spot AS organises electricity power trading with physical delivery and which is allocated a separate bidding area in the Nordic ‘Elspot’ market …”

  212. 212.

    See, for example, point 20 of Article 2 of Commission Regulation …/.. (CACM Regulation).

  213. 213.

    N2EX Physical Market, Trading Appendix 3/Clearing Appendix 2, Product Specifications (27 November 2014), section 2.4.

  214. 214.

    N2EX Physical Market, Trading Appendix 3/Clearing Appendix 2, Product Specifications (27 November 2014), section 3.4.

  215. 215.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 1.2; N2EX Physical Market, Trading Appendix 3/Clearing Appendix 2, Product Specifications (27 November 2014), section 4.1.

  216. 216.

    EPEX Spot Exchange Rules (28 November 2014), Article 6.4.

  217. 217.

    EPEX Spot Exchange Rules (28 November 2014), Article 5.10. EPEX Spot Operational Rules (28 November 2014), Article 1.3.2.2, Continuous Trading: EPEX Spot French intraday; EPEX Spot German intraday; EPEX Spot Austrian intraday; EPEX Spot Swiss intraday. See also EPEX Spot Operational Rules (28 November 2014), Article 1.4 on market coupling contracts with daily auction.

  218. 218.

    EPEX Spot Operational Rules (28 November 2014), Article 2.3.5.

  219. 219.

    EPEX Spot Exchange Rules (28 November 2014), Article 6.4. See, for example, EPEX Spot Operational Rules (28 November 2014), Article 1.3.1: EPEX Spot Austrian/German day-ahead auction; EPEX Spot French day-ahead auction; EPEX Spot Swiss day-ahead auction.

  220. 220.

    Creti A et al. (2010), citing Meeus L (2006).

  221. 221.

    EPEX Spot Operational Rules (28 November 2014), Article 2.2.1.

  222. 222.

    EPEX Spot Operational Rules (28 November 2014), Article 2.2.2.

  223. 223.

    Nord Pool Spot Physical Markets, Trading Appendix 3, Product Specifications (launch of Elbas4). See also Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014).

  224. 224.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014); Nord Pool Spot, Elspot Market Regulations (1 July 2014), section 4.2.4.

  225. 225.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (NWE/PCR go-live 2014): “Block Order Volume Limit means the volume limit placed on each Block Order, as specified from time to time in the Product Specifications”. “Energy Volume Limit means the maximum Energy Volume applicable to an Order where such designation is applicable”. “Fill Order means an Order in Elbas that may be matched for the full volume or part of the volume”.

  226. 226.

    Nord Pool Spot, Exchange information, No. 44/2014, 4 November 2014. Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Fill-or-Kill Order means an Order that shall be immediately matched for the whole order volume or cancelled”. “Iceberg Order means an Order in the Elbas Market that has a partly hidden overall volume. Each part of the Iceberg Order is called a Clip. When the Order has been submitted, other Participants will only see the first Clip as a part of the total volume when the Order is submitted. When the first Clip is matched, the next Clip receives a new order number and time stamp”. “Immediate-or-Cancel means an Order that shall be immediately matched for as much of the order volume as possible and then cancelled”.

  227. 227.

    N2EX Physical Market, Trading Appendix 3/Clearing Appendix 2, Product Specifications (27 November 2014), section 2.1 (Prompt Market), section 3.1 (Spot Market), and section 4.1 (Auction Market). See also N2EX Physical Market, Trading Appendix 2B, Auction Market Regulations (1 October 2014).

  228. 228.

    N2EX Physical Market, Trading Appendix 1/Clearing Appendix 1, Definitions (27 November 2014): “Fill-and-Kill Order means an Order that shall be immediately matched for as much of the order volume as possible and then cancelled”.

  229. 229.

    N2EX Physical Market, Trading Appendix 1/Clearing Appendix 1, Definitions (27 November 2014): “Stop Order means a conditional Order that shall only be executed when a specific price level is reached, as further specified in the individual Stop Order through the input parameters of the ETS”.

  230. 230.

    N2EX Physical Market, Trading Appendix 1/Clearing Appendix 1, Definitions (27 November 2014): “Exclusive Group means a set of Block Orders nominated as an Exclusive Group by the Participant that submits such Block Orders which shall be subject to the following conditions …”

  231. 231.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Price Step means a pair of Order Price and Energy Volume values on an Order curve in the Elspot Market between (and including) the upper and lower Order Price Limits of the Order”.

  232. 232.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Hourly Order means an Order in the Elspot Market where a Participant states volumes to buy or sell at different price levels in a set of Price Steps defined for a specific Delivery Hour. Each pair of price and volume is handled as a point on an Order Curve with linear interpolation between each pair”.

  233. 233.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Flexible Hourly Offer means an Offer in the Elspot Market specifying which volume of electricity a Participant would be willing to sell at a specified price in any Delivery Hour within the relevant Delivery Day”.

  234. 234.

    Nord Pool Spot, Exchange Information No. 3/2015—Gross Bidding service offered to Clients from 1 February 2015 (15 January 2015).

  235. 235.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 6.1.1.

  236. 236.

    Nord Pool Spot, Trading Agreement 3, Gross Bidding Agreement (27 October 2014), sections 1.2 and 1.3.

  237. 237.

    Nord Pool Spot, Trading Agreement 3, Gross Bidding Agreement (27 October 2014), section 3.2.

  238. 238.

    Nord Pool Spot, Trading Agreement 3, Gross Bidding Agreement (27 October 2014), section 2.1(b).

  239. 239.

    Nord Pool Spot, Trading Agreement 3 A, Gross Bidding Agreement—Clients (1 February 2015).

  240. 240.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 4.1.1 and section 4.1.2.

  241. 241.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 4.3.

  242. 242.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 2.4.1 and section 1.1.3.

  243. 243.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 4.1.1.

  244. 244.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 6.1.1.

  245. 245.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 3.1.1 (hourly orders); section 3.2.1 (flexible hourly offers); section 3.3.1 (block orders); section 3.3.2 (linked block orders); section 3.4.1 (block offers that can be converted to hourly offers).

  246. 246.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 1.1.5.

  247. 247.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 4.3.1.

  248. 248.

    EPEX Spot Exchange Rules (28 November 2014), Article 6.4.

  249. 249.

    EPEX Spot Operational Rules (28 November 2014), Article 1.5.5.

  250. 250.

    EPEX Spot Operational Rules (28 November 2014), Article 1.6.3.

  251. 251.

    EPEX Spot Operational Rules (28 November 2014), Article 1.6.4.

  252. 252.

    EPEX Spot Operational Rules (28 November 2014), Article 1.6.4.

  253. 253.

    EPEX Spot Operational Rules (28 November 2014), Article 1.6.4: “… For Price determination purposes, the Member’s interest is assumed to be linear between two price/quantity combinations …”

  254. 254.

    Compare EPEX Spot Operational Rules (6 June 2013), Article 1.6.6: “In the framework of the execution of the single hour auction on the German/Austrian segment volume market coupling is carried out by EMCC acting as an auction office. Under this process EMCC receives the aggregated and anonymised purchase and sale curves including the list of anonymised block bids of EPEX Spot on the German/Austrian segment after the end of the submission of Orders and before pricing.

    The Auction Office calculates the volume Orders (price-independent buy and sell Orders) for the respective single hours, which are required for the optimisation of capacity utilisation, on the basis of the available purchase and sale curves and the list of anonymised block bids and under consideration of available transmission rights on the cross-border transfer points. The auction office exclusively submits price-independent buy and sell Orders to the single hour auctions of the markets involved … The volume Orders by the auction office have to total zero across all the spot markets involved”.

  255. 255.

    Article 16(2) of Directive 2009/28/EC (RES Directive); Articles 15(3) and 25(4) of Directive 2009/72/EC (Third Electricity Directive).

  256. 256.

    For an introduction to EEG 2014, see Monopolkommission (2014), p. 74, point 68.

  257. 257.

    For an introduction to EEG 2012, see Monopolkommission (2013), section 3.3.1.

  258. 258.

    § 2 and § 5(1) EEG 2012.

  259. 259.

    §§ 34–37 EEG 2012.

  260. 260.

    § 34 EEG 2012.

  261. 261.

    § 37(2) EEG 2014. The capacity thresholds are 500 kW (for installations taken into use before 1 January 2016) and 100 kW (for installations taken into use after 31 December 2015).

  262. 262.

    § 34(1) EEG 2014.

  263. 263.

    § 11(1) EEG 2014.

  264. 264.

    See EPEX Spot Operational Rules (28 November 2014), Article 1.5.5: “The Orders sent to EPEX Spot SE by Exchange Members remain in the Order Book until: – the Order is cancelled by the Member that placed it, or, – the Member modifies the Order, or, – the Order is executed”. Article 1.6.3: “… Once the Order Book is closed, Orders may not be modified or cancelled and are binding and irrevocable”.

  265. 265.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 8.5.1.

  266. 266.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 7.5.1.

  267. 267.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 12; N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 11.

  268. 268.

    EPEX Spot Operational Rules (28 November 2014), Article 2.16 and Article 2.19.

  269. 269.

    Commission, Draft Working Document on Post-trading (2006), p. 6.

  270. 270.

    Commission, Draft Working Document on Post-trading (2006), pp. 6–7.

  271. 271.

    Compare Commission, Draft Working Document on Post-trading (2006), p. 7.

  272. 272.

    Points 1 and 3 of Article 2 of Regulation 648/2012 (EMIR).

  273. 273.

    European Code of Conduct for Clearing and Settlement (7 November 2006), para 39: “Organisations shall unbundle prices and services at least as follows (i) The services of trading venues, CCPs and CSDs will be unbundled from each other. (ii) Each CSD will unbundle the following services each from the other: a. Account provision, establishing securities in book entry form, and asset servicing; b. Clearing and settlement (including verification); c. Credit provision; d. Securities lending and borrowing; and e. Collateral management”.

  274. 274.

    For instance, ECC AG must notify EPEX Spot SE of the approval of a Trading Participant. EPEX Spot Exchange Rules (28 November 2014), Article 2.11.

  275. 275.

    For instance, EPEX Spot SE must notify ECC AG of transactions concluded by trading participants. EPEX Spot Exchange Rules (28 November 2014), Article 7.2.

  276. 276.

    Points 1 and 3 of Article 2 of Regulation 648/2012 (EMIR).

  277. 277.

    European Code of Conduct for Clearing and Settlement (7 November 2006), para 39.

  278. 278.

    EPEX Spot Exchange Rules (28 November 2014), Article 1.5.

  279. 279.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Counterparty means the Participant and Clearing Customer entering into a Transaction, and NPS acting as central counterparty in all Transactions”. “Nord Pool Spot or NPS means Nord Pool Spot AS, a Norwegian company with reg. no 984 058 098 in the Norwegian Company Register”. Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 1.1.1: “These Clearing Rules apply to the Clearing of Products in the Physical Markets”. Section 1.1.2: “Clearing is initiated by NPS entering into a Transaction as central counterparty and registering the Transaction on the Clearing Accounts of the Account Holders involved”.

  280. 280.

    N2EX Market, Trading Appendix 1/Clearing Appendix 1, Definitions (DRAFT NWE/PCR implementation): “Counterparty means the Account Holder(s) entering into a Clearing Transaction, and NOMX acting as counterparty in all Clearing Transactions”. “NASDAQ OMX Stockholm AB or NOMX means NASDAQ OMX Stockholm AB, a Swedish company with reg. no 556420-8394 in the Swedish company register, in its capacity as a counterparty to all Clearing Transactions on the N2EX Market”. “Clearing Transaction means a Transaction that is registered with and approved by NOMX for Clearing”.

  281. 281.

    N2EX Physical Market, Trading Appendix 1/Clearing Appendix 1, Definitions (1 October 2014).

  282. 282.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 1.1.2.

  283. 283.

    N2EX Market, General Terms, Clearing Rules (3 September 2013), section 6.2.2: “Upon the conclusion of a Transaction on a Trading System and allocation of the Transaction to a Trading Portfolio, the Transaction will be immediately replicated (mirrored) to the Clearing Portfolio associated with the applicable Trading Portfolio, and Clearing Transactions are created and allocated to the applicable Clearing Accounts in accordance with Section 6.1”. Section 6.2.3: “The Transaction Confirmation from the Market Operator also serves as Clearing Confirmation from NOMX in respect of the corresponding Clearing Transactions created”.

  284. 284.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 6.2.1.

  285. 285.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.1(1).

  286. 286.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.1(2): “According to the more detailed definition provided in section 3.4.3, spot market transactions on the markets are concluded between ECC and ECC Lux and between ECC Lux and the Trading Participant at the same time. In deviation of the above neither ECC nor ECC Lux becomes a contractual party to the PXE spot market transactions. These transactions are being concluded between the Trading Participants and a counterparty (Energy Clearing Company a.s. – EnCC) commissioned by PXE. EnCC is a Clearing Entity according to section 2.6”.

  287. 287.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.3(1): “Clearing Members are obliged to settle all obligations arising from matching of orders or registered OTC transactions which they have entered into the system on a market”.

  288. 288.

    ECC Clearing Conditions (0022a, 30 April 2014), 1 Definition of Terms: “Balance agreement: All contractual agreements between the transmission system operator or hub operator and the Trading Participant as well as between the transmission system operator/hub operator and ECC and ECC Lux regarding the settlement of power and natural gas deliveries”.

  289. 289.

    For the definition of balance responsible, see EPEX Spot Rules & Regulations, Appendix, Definitions (28 November 2014).

  290. 290.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.3(1).

  291. 291.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.3(2).

  292. 292.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.5(4).

  293. 293.

    See already point (e) of Article 2 of Directive 98/26/EC (Directive on settlement finality): “‘clearing house’ shall mean an entity responsible for the calculation of the net positions of institutions, a possible central counterparty and/or a possible settlement agent”.

  294. 294.

    EPEX Spot Exchange Rules (28 November 2014), Article 1.7: “… The Transmission System Operator (TSO) for a given Market Area provides the actual Delivery of the Contracts traded on EPEX Spot”.

  295. 295.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.1.4.

  296. 296.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 11.1.1.

  297. 297.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), sections 3.2.2 and 5.2.

  298. 298.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(1).

  299. 299.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.23.

  300. 300.

    ECC Clearing Conditions (0022a, 30 April 2014), section 1.

  301. 301.

    EPEX Spot Exchange Rules (28 November 2014), Article 1.7: “… The Transmission System Operator (TSO) for a given Market Area provides the actual Delivery of the Contracts traded on EPEX Spot”.

  302. 302.

    EPEX Spot Exchange Rules (28 November 2014), Article 7.2.

  303. 303.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.2(2).

  304. 304.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 6.2.

  305. 305.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.1.2.

  306. 306.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.1.4.

  307. 307.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.1.3.

  308. 308.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), sections 4.1.1 and 4.1.2. See also section 4.1.4: “Cash Settlement will be based on the Transactions recorded with NPS only, and will not reflect non-delivery or non-off-take”.

  309. 309.

    EPEX Spot Operational Rules (28 November 2014), Article 1.8 (on auction trading).

  310. 310.

    EPEX Spot Exchange Rules (28 November 2014), Article 7.2.

  311. 311.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.2(2).

  312. 312.

    ECC Clearing Conditions, (0022a, 30 April 2014), section 5.2.3(1): “Physical delivery and acceptance of delivery of power is effected directly by the Trading Participant towards ECC Lux and at the same time between ECC Lux and ECC subject to the provisions specified in these Clearing Conditions and the respectively valid balance agreements. The delivery is effected by submitting a nomination or schedule in accordance with the requirements of the respective Balancing Agreement, which comprises the underlying delivery transaction as well as the binding confirmation of the nomination or schedule by the respective transmission system operator”.

  313. 313.

    EPEX Spot Exchange Rules (28 November 2014), Article 5.2.

  314. 314.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(3).

  315. 315.

    See, for example, Mäntysaari P (2010b), section 2.2.3.

  316. 316.

    Special Condition C16 of the Statements of the Transmission Licence.

  317. 317.

    ELEXON, Overview of the Balancing and Settlement Code (BSC) Arrangements.

  318. 318.

    BSC, Section A, para 1.2. Parties include: (a) ELEXON; (b) the National Grid Company; (c) Licensees; and (d) others that voluntarily choose to become Parties.

  319. 319.

    BSC, Section A, para 1.3. Each Party may have one or more different participation capacities under the BSC: (a) the Transmission Company (currently National Grid as Transmission Licensee); (b) a Distribution System Operator (i.e. those holding a Distribution Licence); (c) a Trading Party (a party that holds Energy Accounts); (d) a Supplier (a Party that holds a Supply Licence and has metering systems registered in Supplier Volume Allocation (SVA); (e) an Interconnector Error Administrator (IEA), or an Interconnector Administrator (IA) (see Section K).

  320. 320.

    BSC, Section A, para 1.4.

  321. 321.

    BSC, Section A, para 1.4.2: “Subject to paragraph 1.4.3, no Party shall hold more than one Production Energy Account and more than one Consumption Energy Account and, accordingly, a Party which falls within more than one of the descriptions in paragraph 1.4.1(a), (b) or (c) shall hold one Production Energy Account and one Consumption Energy Account for all such activities”.

  322. 322.

    Ofgem (2009), para 3.74.

  323. 323.

    § 1.1 of the EFET GTMA Appendix.

  324. 324.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 6.2.3.

  325. 325.

    Ibid, section 11.1.

  326. 326.

    Ibid, section 5.2.1 and section 5.2.2.

  327. 327.

    Ibid, section 5.2.3.

  328. 328.

    Ibid, section 11.2.1.

  329. 329.

    Ibid, section 11.3.1.

  330. 330.

    Ibid, section 11.3.4.

  331. 331.

    Ibid, section 11.2.2.

  332. 332.

    Ibid, section 11.2.5.

  333. 333.

    Ibid, section 11.1.3 and section 11.1.4.

  334. 334.

    N2EX Physical Market, Clearing Agreement F, ECV Transferee Agreement (1 October 2014), section 3.1 and section 3.3.

  335. 335.

    N2EX Physical Market, Clearing Agreement F, ECV Transferee Agreement (1 October 2014), section 1.2 and section 1.3.

  336. 336.

    N2EX Physical Market, Clearing Agreement F, ECV Transferee Agreement (1 October 2014), section 4.2.

  337. 337.

    N2EX Physical Market, Clearing Agreement F, ECV Transferee Agreement (1 October 2014), section 4.

  338. 338.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 11.3.3.

  339. 339.

    Ibid, section 11.4.

  340. 340.

    Ibid, section 11.4.5.

  341. 341.

    Hünerwadel A (2007), p. 56.

  342. 342.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.11: “The orderly settlement of Transactions on EPEX Spot is deemed to be secured when all of the following requirements are fulfilled: – The Exchange Member has to take part in clearing on ECC AG in accordance with the respectively valid Clearing Conditions of European Commodity Clearing AG (ECC AG); …”

  343. 343.

    Article 50(1) of Regulation 648/2012 (EMIR).

  344. 344.

    Article 50(3) of Regulation 648/2012 (EMIR).

  345. 345.

    EPEX Spot Rules & Regulations, Appendix, Definitions (28 November 2014).

  346. 346.

    Clearing Conditions of European Commodity Clearing AG (0022a, 30 April 2014).

  347. 347.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.2.

  348. 348.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.1.4.

  349. 349.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 18.1.1.

  350. 350.

    ECC Clearing Conditions (0022a, 30 April 2014), section 6.4(1).

  351. 351.

    ECC Clearing Conditions (0022a, 30 April 2014), section 6.4(2): “Leipzig shall be the exclusive legal venue for all conflicts arising in connection with these Clearing Conditions and Leipzig shall be the place of performance”.

  352. 352.

    ECC Clearing Conditions (0022a, 30 April 2014), 1 Definition of Terms: “Clearing account. Accounts of the Clearing Members, the Sub-CCP and ECC, which are kept by ECC or a third party on behalf of ECC and to which payments are credited or from which such are debited in batch processing during settlement of the transactions in accordance with these Clearing Conditions”.

  353. 353.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 2.2.1.

  354. 354.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 3.3.1.

  355. 355.

    ECC Clearing Conditions (0022a, 30 April 2014), section 2.1.2(5).

  356. 356.

    ECC Clearing Conditions (0022a, 30 April 2014), section 2.2.1 and section 2.3.1.

  357. 357.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (4 February 2014), section 4.2.2.

  358. 358.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 10.1.1.

  359. 359.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.6.6(1).

  360. 360.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.2(3): “All payments including the taxes applicable as per the relevant laws are credited to the clearing account of the Clearing Member or debited from it during batch processing on the trading day or, if this day is not an Business Day, on the next Business Day”.

  361. 361.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 10.1.1.

  362. 362.

    N2EX Physical Market, Clearing Agreement G, Cash Settlement Instructions (1 October 2014).

  363. 363.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (4 February 2014), section 4.2.5.

  364. 364.

    However, self-billing invoices are paid one day later. In the Elbas market, invoices are settled two days after the agreed delivery date and self-billing invoices are paid three days later.

  365. 365.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.2.4.

  366. 366.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.2.5.

  367. 367.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.2.6.

  368. 368.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.2.7: “In the event of overdue payment, the Parties may claim default interest pursuant to the Norwegian act of 17 December 1976 no. 100 regarding interest accrued in connection with late payment, as amended from time to time”.

  369. 369.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 10.1.1.

  370. 370.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.1.1(2).

  371. 371.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.1.1(6).

  372. 372.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.5(1): “Physical delivery of transactions with regard to which ECC has assumed clearing is exclusively provided through its subsidiary – ECC Lux – with the effect that Trading Participants exclusively fulfil their delivery or acceptance of delivery obligations arising from derivatives market transactions and spot market transactions which are fulfilled physically according to their respective contract specifications towards ECC Lux. ECC guarantees the Trading Participants the fulfilment of these transactions by ECC Lux in accordance with the contract”.

  373. 373.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.5(2) and section 3.4.5(3).

  374. 374.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.5(1).

  375. 375.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.3(1), section 3.4.3(2) and section 3.4.5(3)(c).

  376. 376.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 5.1.1(c).

  377. 377.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 5.1.2(a).

  378. 378.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (1 January 2012), section 5.1.2: “The Client Representative is responsible for the following with respect to Client Transactions: … c. If the Client Representative does not post missing Collateral in accordance with section 4.3, the Collateral that a Client Representative has posted for Trading and any outstanding Settlement will be credited and applied by NPS to cover Collateral Calls made on Clients represented by the Clients Representative. When calculating Collateral Calls for a Client Representative, NPS will add uncovered Collateral Calls of the Client Representative’s Clients”.

  379. 379.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 7.2.2.

  380. 380.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.1.3 and section 4.1.4.

  381. 381.

    ECC Clearing Conditions (0022a, 30 April 2014), sections 3.4.9(1) and 3.4.9(2).

  382. 382.

    Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), sections 7.1.1 and 7.1.2.

  383. 383.

    For previous regulation, see Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (1 January 2011), section 7.1.1: “If a Participant wishes to claim errors caused by NPS, the Participant must notify NPS immediately, and in any event no later than 14:00 CET on the day of the relevant Auction”. Section 7.1.4: “Inadequate or late complaints will bar the Participant from raising the complaint against NPS. If a valid complaint has not been received by the end of the complaint period as set out in Section 7.1.1, the Price Report transmitted will be regarded as final and binding for the quantities specified in the Price Report, notwithstanding any error”. Section 7.2.1: “If the Participant becomes aware of errors in Order(s) which are not caused by NPS, the Participant shall notify NPS immediately of such errors”.

  384. 384.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 17.3.

  385. 385.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 8.5.1.

  386. 386.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 6.3.1.

  387. 387.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 6.3.2.

  388. 388.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 10.3.1 and section 10.3.2.

  389. 389.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 10.3.3.

  390. 390.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 10.3.4 and section 18.4.

  391. 391.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 18.5.

  392. 392.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.11.

  393. 393.

    ECC Clearing Conditions (0022a, 30 April 2014), Preamble.

  394. 394.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.5(1).

  395. 395.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(3).

  396. 396.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(3): “… Further consequences might arise from the provisions contained in the respective balance agreement”. ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(1): “Physical delivery of the spot market transactions is effected directly by the Trading Participant towards ECC Lux subject to the provisions specified in these Clearing Conditions and the respectively valid balance agreements …”

  397. 397.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.5(4).

  398. 398.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.5.

  399. 399.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.1.4 and section 4.1.3.

  400. 400.

    EPEX Spot Operational Rules (28 November 2014), Article 1.2.

  401. 401.

    EPEX Spot Rules & Regulations, Appendix, Definitions (28 November 2014).

  402. 402.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.11.

  403. 403.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(1).

  404. 404.

    ECC Clearing Conditions (0022a, 30 April 2014), section 2.3.1(1)(c). See also ECC Clearing Conditions, (0022a, 30 April 2014), section 5.2.3(3).

  405. 405.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.1.7(2).

  406. 406.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.5(1).

  407. 407.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.3 and section 3.4.5(1).

  408. 408.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.5.

  409. 409.

    ECC Clearing Conditions (0022a, 30 April 2014), section 4.2.2.1(3).

  410. 410.

    See, for example. EFET General Agreement (Version 2.1(a)), § 6.1.

  411. 411.

    See, for example, Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014).

  412. 412.

    See, for example, Nord Pool Spot Physical Market, Trading Appendix 2a, Elspot Market Regulations (18 November 2014), section 2.2.4.

  413. 413.

    See, for example, EPEX Spot Exchange Rules (28 November 2014), Article 5.10.

  414. 414.

    EPEX Spot Operational Rules (28 November 2014), Article 1.2.

  415. 415.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 11.1.1 and section 11.1.2.

  416. 416.

    See, for example, EPEX Spot Exchange Rules (28 November 2014), Article 5.2. For a definition for the purposes of REMIT, see point 8 of second subparagraph of Article 2 of Commission Implementing Regulation 1348/2014: “‘nomination’ means, – for electricity: the notification of the use of cross zonal capacity by a physical transmission rights holder and its counterparty to the respective transmission system operator(s)(TSOs) …”

  417. 417.

    See EPEX Spot Exchange Rules (28 November 2014), Article 2.11 on the requirements for the settlement of exchange transactions.

  418. 418.

    EPEX Spot Operational Rules (13 May 2014), Articles 1.3.1 and 1.3.2.

  419. 419.

    EPEX Spot Operational Rules (13 May 2014), Article 1.4.

  420. 420.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Intraday Trading Limit means a trading limit that may be set by NPS for a Participant, based on the Account balance and the Collateral Posted”.

  421. 421.

    See also Articles 24–28 of Regulation 153/2013 (supplementing Regulation 648/2012).

  422. 422.

    duPont JC (2009), p. 851.

  423. 423.

    Article 46(1) of Regulation 648/2012 (EMIR). See also Article 46(3) of Regulation 648/2012 (EMIR) on regulatory technical standards.

  424. 424.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Collateral Call means NPS’s call for Collateral from a Participant or Clearing Customer in accordance with the Clearing Rules”. Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 2.2.1 (on eligibility as a counterparty). Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.1: “Each Member must at its own cost establish and maintain Collateral in accordance with the Clearing Rules, and ensure that the value of its Collateral posted at all times meets the applicable Collateral Calls”. For the client representative’s obligations, see also Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 5.1.2.

  425. 425.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 5.4.1.

  426. 426.

    NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 3.6.1.

  427. 427.

    EEX Exchange Rules (0031b, 22 November 2014), § 51(1).

  428. 428.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(1) and section 3.5.1(2).

  429. 429.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(2).

  430. 430.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (4 February 2014), section 7.1.1; Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014): “Base Collateral Call means NPS call for Collateral from a Participant or Clearing Customer in accordance with Section 8.2 of the General Terms of the Clearing Rules”. “Pledged Cash Account means a pledged account established by a Participant in a Deposit Bank approved by NPS and which shall be applied in connection with cash Settlements and cash collateral deposits towards NPS”.

  431. 431.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(1) and section 3.5.1(2).

  432. 432.

    See, for example, Mäntysaari P (2010b), Chapter 11.

  433. 433.

    Article 46(1) and recital 66 of Regulation 648/2012 (EMIR).

  434. 434.

    First subparagraph of Article 46(3) of Regulation 648/2012 (EMIR): “In order to ensure consistent application of this Article, ESMA shall, after consulting EBA, the ESRB and the ESCB, develop draft regulatory technical standards specifying: (a) the type of collateral that could be considered highly liquid, such as cash, gold, government and high-quality corporate bonds and covered bonds; (b) the haircuts referred to in paragraph 1; and (c) the conditions under which commercial bank guarantees may be accepted as collateral under paragraph 1”. Conditions applicable to financial instruments, bank guarantees and gold considered as highly liquid collateral, Annex I to Regulation 153/2013 (supplementing Regulation 648/2012).

  435. 435.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014); Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 2.1.3.

  436. 436.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.2.

  437. 437.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014).

  438. 438.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 2.2.1: “Only Members are eligible as Counterparties to NPS in Clearing Transactions. To be eligible as a Counterparty to Clearing Transactions, the Member must at the time that each Clearing Transaction is registered: … c. have established one or more Cash Account(s) for settlement purposes to be either a Pledged or Non-pledged Cash Account; … e. have established Collateral as a Pledged Cash Account or a On-Demand Guarantee, and have met its Collateral Call …”

  439. 439.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014).

  440. 440.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 5.4.1.

  441. 441.

    See N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.1.2.

  442. 442.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.3.6.

  443. 443.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.1.2.

  444. 444.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1.

  445. 445.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(2).

  446. 446.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1.

  447. 447.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.5(1) and section 3.5.5(2).

  448. 448.

    EEX Exchange Rules (0031b, 22 November 2014), § 51(1).

  449. 449.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(4).

  450. 450.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.9.

  451. 451.

    NASDAQ OMX, Trading Appendix 1/Clearing Appendix 1, Definitions, Commodity Derivatives (7 April 2014).

  452. 452.

    NASDAQ OMX, Clearing Appendix 10, Collateral List, Commodity Derivatives (12 June 2014). NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 3.6.2.

  453. 453.

    Recital 16 and point 1 of Article 3 of Regulation 1031/2010 (Auctioning Regulation): “‘futures’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Commission Regulation (EC) No 1287/2006, for delivery at an agreed future date at the auction clearing price determined pursuant to Article 7(2) of this Regulation and upon which variation margin calls to reflect price movements are payable in cash”. Point 2: “‘forwards’ means allowances auctioned as financial instruments, pursuant to Article 38(3) of Regulation (EC) No 1287/2006, for delivery at an agreed forward date at the auction clearing price determined pursuant to Article 7(2) of this Regulation and upon which variation margin calls to reflect price movements may be secured, either through non-cash collateral or by means of an agreed government guarantee, at the option of the central counterparty”.

  454. 454.

    Article 41(3) of Regulation 648/2012 (EMIR). See, for example, also NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 5.1.1: “The Clearinghouse determines the Margin Requirement(s) for each Account Holder on each Bank Day. Each Margin Requirement shall be calculated in accordance with the model applied by the Clearinghouse from time to time. Upon request, the Clearinghouse shall provide free of charge a description of the relevant model and the calculation method”.

  455. 455.

    Article 1 of Regulation 153/2013 (supplementing Regulation 648/2012): “… (4) ‘margins’ means margins as referred to in Article 41 of Regulation (EU) No 648/2012 which may include initial margins and variation margins; (5) ‘initial margin’ means margins collected by the CCP to cover potential future exposure to clearing members providing the margin and, where relevant, interoperable CCPs in the interval between the last margin collection and the liquidation of positions following a default of a clearing member or of an interoperable CCP default; (6) ‘variation margin’ means margins collected or paid out to reflect current exposures resulting from actual changes in market price …”

  456. 456.

    First subparagraph of Article 42(1) of Regulation 648/2012 (EMIR).

  457. 457.

    Article 42(2) of Regulation 648/2012 (EMIR).

  458. 458.

    Ofgem (2009), para 3.8: “… The Initial Margin is intended to cover within-day price volatility and is payable at the time the contract is entered into. Clearing Houses typically set this margin in the region of 8–10 % of the contract value (as measured by the current forward curve) …”

  459. 459.

    Pilgram T (2010), p. 380, point 699.

  460. 460.

    NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 5.2.1.

  461. 461.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.4.

  462. 462.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.2.1.

  463. 463.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(1).

  464. 464.

    ECC Clearing Conditions (0022a, 30 April 2014), section 4.1(1): “A margin (collateral) for the costs of closing-out (SPAN® Initial Margin) shall be furnished for net positions in futures and options”.

  465. 465.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.1(1): “A margin (Spot Initial Margin) covering the default of net payers for ECC (including any taxes which might be incurred) shall be furnished for risks from spot market transactions. Credits from the Premium Margin for derivatives market transactions are taken into account with regard to the Spot Initial Margin”.

  466. 466.

    ECC Clearing Conditions (0022a, 30 April 2014), section 2.1.2(1) and section 2.1.2(5).

  467. 467.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.8.1.

  468. 468.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.3(1).

  469. 469.

    See EEX Product Brochure Power (7 August 2012), section 4.3.

  470. 470.

    Ofgem (2009), para 3.89: “Variation (or ‘close-out’) margin is changed during the life of the forward contract. This margining process requires additional collateral to be posted by the party holding a position that is loss-making against current market prices (in order to mitigate replacement risk). Variation Margins may also include an element for settlement risk – the risk of non-payment (in the event of default) of monies owed under the contract”.

  471. 471.

    Ofgem (2009), para 3.90.

  472. 472.

    NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 5.3.

  473. 473.

    NASDAQ OMX Clearing AB, General Terms, Clearing Rules, Commodity Derivatives (9 June 2014), section 5.4.3: “… including increase in market share and matters that indicate a higher credit risk in respect of the Account Holder”.

  474. 474.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.6.

  475. 475.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.12.

  476. 476.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.3.1 and section 8.3.3.

  477. 477.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.3.3.

  478. 478.

    See N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.3.4.

  479. 479.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(2).

  480. 480.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.8.1(1) and section 3.8.1(2).

  481. 481.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1.

  482. 482.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(1).

  483. 483.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(2).

  484. 484.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.3(1) and section 3.5.3(2).

  485. 485.

    ECC Clearing Conditions (0022a, 30 April 2014), section 4.1(1) and section 5.1(1).

  486. 486.

    Pilgram T (2010), pp. 380–383, points 699–705.

  487. 487.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(3).

  488. 488.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.3(1) and section 3.5.3(2).

  489. 489.

    ECC Clearing Conditions (0022a, 30 April 2014), section 4.2.3.3(2).

  490. 490.

    ECC Clearing Conditions (0022a, 30 April 2014), section 4.1(2) and section 4.2.3.3(1).

  491. 491.

    ECC Clearing Conditions (0022a, 30 April 2014), section 4.1(3).

  492. 492.

    Pilgram T (2010), p. 381, point 700.

  493. 493.

    Pilgram T (2010), p. 381, point 701.

  494. 494.

    See recital 28 of Regulation 600/2014 (MiFIR).

  495. 495.

    Recital 24 and Article 27(1) of Regulation 153/2013 (supplementing Regulation 648/2012): “A CCP may allow offsets or reductions in the required margin across the financial instruments that it clears if the price risk of one financial instrument or a set of financial instruments is significantly and reliably correlated, or based on equivalent statistical parameter of dependence, with the price risk of other financial instruments”. See also Article 27(4) of Regulation 153/2013 (supplementing Regulation 648/2012): “Where portfolio margining covers multiple instruments, the amount of margin reductions shall be no greater than 80 % of the difference between the sum of the margins for each product calculated on an individual basis and the margin calculated based on a combined estimation of the exposure for the combined portfolio. Where the CCP is not exposed to any potential risk from the margin reduction, it may apply a reduction of up to 100 % of that difference”.

  496. 496.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.9.3(4).

  497. 497.

    Articles 24–28 of Regulation 153/2013 (supplementing Regulation 648/2012).

  498. 498.

    Recital 24 of Regulation 153/2013 (supplementing Regulation 648/2012).

  499. 499.

    See, for example, first subparagraph of Article 25(1), Article 28(1) and recital 26 of Regulation 153/2013 (supplementing Regulation 648/2012).

  500. 500.

    SPAN® is a registered trademark of Chicago Mercantile Exchange Inc., used by NOMX Clearing under a license.

  501. 501.

    Pilgram T (2010), p. 382, point 702.

  502. 502.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.

  503. 503.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.2.1.

  504. 504.

    Ibid, section 8.3.1.

  505. 505.

    Ibid, section 8.3.3.

  506. 506.

    Ibid, section 8.3.4.

  507. 507.

    Ibid, section 8.3.5.

  508. 508.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(1).

  509. 509.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(1).

  510. 510.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(1): “The method for the calculation of the different margin requirements to be furnished shall be established by ECC. The bases for the determination of the margins are laid down in section 4.1 for Derivatives Market transactions and in section 5.1 for Spot Market transactions …”

  511. 511.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(1).

  512. 512.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(2).

  513. 513.

    Article 47 of Regulation 648/2012 (EMIR).

  514. 514.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.4 and section 5.1.2. N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.2.1 on the Base Collateral Call; section 8.3.1 on the Daily Margin Call; section 8.4.1 on the Extraordinary Margin Call.

  515. 515.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.1(1).

  516. 516.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.2(2).

  517. 517.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.3.12.

  518. 518.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 8.4.1.

  519. 519.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.5.3(1), section 3.5.3(2) and section 3.5.1(3). EPEX Spot Exchange Rules (28 November 2014), Article 2.21 (suspension of admission of a member).

  520. 520.

    Pilgram T (2010), pp. 388–390, points 715–716.

  521. 521.

    Directive 98/26/EC (Directive on settlement finality).

  522. 522.

    Directive 2002/47/EC (Directive on financial collateral arrangements).

  523. 523.

    Nord Pool Spot AS, Rulebook for the Physical Markets, section 7.3.3: “NPS may set-off any and all claims and receivables between NPS and the respective Participant or Clearing Customer. NPS may also set-off delivery obligations”.

  524. 524.

    Nord Pool Spot, Clearing Rules, Gaspoint Nordic Physical Market, Issued by Nord Pool Spot AS, Version 1.1 (January 2014), section 7.6.5: “NPS may set-off any and all claims and receivables between NPS and the respective Member”.

  525. 525.

    Nord Pool Spot Market, Trading Appendix 1, Definitions (27 November 2014). See also Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 4.2.2.

  526. 526.

    Nord Pool Spot AS, Trading Agreement 9, Netting of Collateral Call Agreement, section 3.1 and section 2.1(a).

  527. 527.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 11.1.3.

  528. 528.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 11.2.3, section 11.2.4, section 11.3.2(d), section 11.3.4.

  529. 529.

    Ibid, section 6.1.6.

  530. 530.

    Ibid, section 8.3.3.

  531. 531.

    Ibid, section 5.1.5.

  532. 532.

    Ibid, section 12.2.2.

  533. 533.

    The Balance and Settlement Code, Section N: Clearing, Invoicing & Payment, Version 13.0 (3 June 2010), section 2.4.1 on payment netting.

  534. 534.

    The Balance and Settlement Code, Section N: Clearing, Invoicing & Payment, Version 13.0 (3 June 2010), section 4.6.7.

  535. 535.

    The Balance and Settlement Code, Section N: Clearing, Invoicing & Payment, Version 13.0 (3 June 2010), section 2.6.1.

  536. 536.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.7(1).

  537. 537.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.7(3).

  538. 538.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.4.7(4).

  539. 539.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.9.3.

  540. 540.

    ECC Clearing Conditions (0022a, 30 April 2014), section 3.10.

  541. 541.

    For the role of ethics in the management of agency relationships, see, for example, Mäntysaari P (2010a), section 6.2.

  542. 542.

    For legal compliance programmes generally, see Mäntysaari P (2010a), section 4.3.

  543. 543.

    See EEX Code of Conduct (24 June 2010); Godager K (2009), § 18, number 1.

  544. 544.

    See, for example, Case C-248/11 Criminal proceedings against Rareş Doralin Nilaş and others, ECLI:EU:C:2012:166, paras 44–46.

  545. 545.

    Article 1(1) of Directive 2014/65/EU (MiFID II): “This Directive shall apply to investment firms, market operators …” Section A of Annex I to Directive 2014/65/EU (MiFID II): “… (8) Operation of an MTF; (9) Operation of an OTF”. For regulated markets, see Article 44 of Directive 2014/65/EU (MiFID II) and points (5)-(7) of section C of Annex I to MiFID II.

  546. 546.

    Points (4) and (11) of Section C of Annex I to Directive 2014/65/EU (MiFID II). See also recital 45 of Regulation 600/2014 (MiFIR).

  547. 547.

    Article 4(1)(21) of Directive 2014/65/EU (MiFID II); Article 4(1)(22) of Directive 2014/65/EU (MiFID II).

  548. 548.

    Articles 39 and 42 of Directive 2004/39/EC (MiFID).

  549. 549.

    Points (d) and (e) of Article 47(1) of Directive 2014/65/EU (MiFID II) and Article 53 of Directive 2014/65/EU (MiFID II).

  550. 550.

    Article 54 of Directive 2014/65/EU (MiFID II).

  551. 551.

    Points 6 and 7 of Section C of Annex I to Directive 2014/65/EU (MiFID II). See also recital 20 of Regulation 596/2014 (MAR).

  552. 552.

    Point 19 of Section A of Annex I to Directive 2014/65/EU (MiFID II): “‘multilateral system’ means any system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system”.

  553. 553.

    Article 1(1) of Directive 2014/65/EU (MiFID II).

  554. 554.

    EPEX Spot Code of Conduct (9 July 2012), section 1(2): “According to European Regulation n° 1227/2011 on wholesale energy market integrity and transparency (REMIT), the EPEX SPOT Code of Conduct establishes rules prohibiting abusive practices affecting wholesale energy markets”.

  555. 555.

    ISDA (2011).

  556. 556.

    Regulation 1227/2011 (REMIT).

  557. 557.

    Regulation 596/2014 (MAR) and Directive 2014/57/EU (MAD II).

  558. 558.

    Directive 2003/6/EC (Market Abuse Directive, MAD).

  559. 559.

    Directive 91/308/EEC (Money Laundering Directive), as amended by Directive 2001/97/EEC.

  560. 560.

    Article 4(1) of Directive 2014/65/EU (MiFID II).

  561. 561.

    Point 19 of Article 4(1) of Directive 2014/65/EU (MiFID II): “‘multilateral system’ means any system or facility in which multiple third-party buying and selling trading interests in financial instruments are able to interact in the system”.

  562. 562.

    Articles 47 and 53 of Directive 2014/65/EU (MiFID II).

  563. 563.

    Article 54 of Directive 2014/65/EU (MiFID II).

  564. 564.

    Point 1 of Article 2(1) of Regulation 600/2014 (MiFIR); point 1 of Article 4(1) of Directive 2014/65/EU (MiFID II): “‘investment firm’ means any legal person whose regular occupation or business is the provision of one or more investment services to third parties and/or the performance of one or more investment activities on a professional basis”.

  565. 565.

    Point (a) of Article 2(1) of Directive 2003/71/EC (Prospectus Directive): “‘securities’ means transferable securities as defined by Article 1(4) of Directive 93/22/EEC with the exception of money market instruments as defined by Article 1(5) of Directive 93/22/EEC, having a maturity of less than 12 months”. For disclosure obligations, see Articles 3(1) and 7.

  566. 566.

    Article 1(1) of Regulation 1227/2011 (REMIT).

  567. 567.

    Recital 10 of Regulation 1227/2011 (REMIT).

  568. 568.

    Article 1(2) of Regulation 1227/2011 (REMIT).

  569. 569.

    Recitals 3 and 7 of Regulation 1227/2011 (REMIT).

  570. 570.

    For the sector-specific conditions, see also Article 6(2) of Regulation 1227/2011 (REMIT): “The delegated acts referred to in paragraph 1 shall take into account at least: (a) the specific functioning of wholesale energy markets, including the specificities of electricity and gas markets, and the interaction between commodity markets and derivative markets; (b) the potential for manipulation across borders, between electricity and gas markets and across commodity markets and derivative markets; (c) the potential impact on wholesale energy market prices of actual or planned production, consumption, use of transmission, or use of storage capacity; and (d) network codes and framework guidelines adopted in accordance with Regulations (EC) No 714/2009 and (EC) No 715/2009”. See also Godager K (2009), § 18, number 39.

  571. 571.

    The Principles are contained in EFET (2012). See also Spicker J (2010), pp. 141–142, numbers 240–241.

  572. 572.

    For legal compliance programmes generally, see Mäntysaari P (2010a), section 4.3.

  573. 573.

    Article 16 of Regulation 596/2014 (MAR).

  574. 574.

    ACER, Guidance on the application of the definitions set out in Article 2 of Regulation (EU) No 1227/2011 (20 December 2011), section 4.2.

  575. 575.

    Article 15 of Regulation 1227/2011 (REMIT).

  576. 576.

    See also Ledgerwood S and Harris D (2012), p. 35.

  577. 577.

    ACER, Guidance on the application of the definitions set out in Article 2 of Regulation (EU) No 1227/2011 (20 December 2011), section 4.4.

  578. 578.

    North Pool Spot, Quarterly report for Market Surveillance: 1 January to 31 March 2014.

  579. 579.

    Articles 18(1) and 51(1) of Directive 2014/65/EU (MiFID II).

  580. 580.

    Second subparagraph of Article 18(2) of Directive 2014/65/EU (MiFID II).

  581. 581.

    Article 24(1) of Directive 2014/65/EU (MiFID II) and second subparagraph of Article 30(1) of Directive 2014/65/EU (MiFID II).

  582. 582.

    DG Internal Market and Services, Public Consultation, Review of the Markets in Financial Instruments Directive (MIFID) (8 December 2010), section 7.2.5.

  583. 583.

    Article 31(1) of Directive 2014/65/EU (MiFID II). First subparagraph of Article 31(2) of Directive 2014/65/EU (MiFID II). Article 31(3) of Directive 2014/65/EU (MiFID II).

  584. 584.

    7 USC § 6 s(h)(1). See also 15 USC § 78o-8(h).

  585. 585.

    See, for example, recital 57 of Directive 2009/72/EC (Third Electricity Directive).

  586. 586.

    See, for example, Articles 15(2), 37(6) and 37(8) of Directive 2009/72/EC (Third Electricity Directive).

  587. 587.

    Recitals 1–2 of Regulation 1227/2011 (REMIT).

  588. 588.

    Recital 86 and Article 24 of Directive 2014/65/EU (MiFID II). Articles 18(1) and 47(1) of Directive 2014/65/EU (MiFID II).

  589. 589.

    Proposal for a Regulation of the European parliament and of the Council on OTC derivatives, central counterparties and trade repositories, 2010/0250 (COD), Article 34(1): “When providing services to its clearing members, and where relevant, to their clients, a CCP shall act fairly and professionally in accordance with the best interests of the clearing members and clients and sound risk management”.

  590. 590.

    Article 3 of Commission Regulation …/.. (CACM Regulation).

  591. 591.

    DG Internal Market and Services, Public Consultation, Review of the Markets in Financial Instruments Directive (MIFID) (8 December 2010), section 7.2.6.

  592. 592.

    EPEX Spot Code of Conduct (9 July 2012), Section 1(1).

  593. 593.

    EPEX Spot Code of Conduct (9 July 2012), section 1(2).

  594. 594.

    EPEX Spot Code of Conduct (9 July 2012), section 6.1.1.

  595. 595.

    EPEX Spot Exchange Rules (28 November 2014), Article 3.2. See also EPEX Spot Code of Conduct (9 July 2012), sections 6.1.2 and 6.3.1.

  596. 596.

    EPEX Spot Code of Conduct (9 July 2012), section 6.3.2.

  597. 597.

    EPEX Spot Exchange Rules (28 November 2014), Article 3.2.

  598. 598.

    EEX Code of Conduct (24 June 2010).

  599. 599.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011).

  600. 600.

    Nord Pool Spot Physical Market, Trading Appendix 5, Market Conduct Rules (7 January 2014).

  601. 601.

    Ibid, section 1.1.

  602. 602.

    Ibid, section 3.1.

  603. 603.

    Ibid, section 1.2.

  604. 604.

    Ibid, section 2.6.

  605. 605.

    Ibid, section 2.5.

  606. 606.

    Ibid, section 3.4.

  607. 607.

    Ibid, section 3.4.

  608. 608.

    Ibid, section 3.1.

  609. 609.

    Ibid, section 3.4.

  610. 610.

    Ibid, section 3.2.

  611. 611.

    Ibid, section 3.3.

  612. 612.

    Ibid, section 3.3.

  613. 613.

    Ibid, section 4.1.

  614. 614.

    Ibid, section 2.2.

  615. 615.

    Ibid, sections 6.1 and 2.3.

  616. 616.

    Ibid, section 5.

  617. 617.

    Ibid, section 7.

  618. 618.

    Ibid, section 5.1.

  619. 619.

    Ibid, section 5.2.

  620. 620.

    Ibid, section 9.

  621. 621.

    Ibid, section 9.3.

  622. 622.

    Nord Pool Spot, Exchange information, No. 37/2014, 13 October 2014.

  623. 623.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 1.2.

  624. 624.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 3.1.

  625. 625.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 4.2.

  626. 626.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 4.1.

  627. 627.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 4.4.

  628. 628.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 4.3.

  629. 629.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 6.1.

  630. 630.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 6.2.

  631. 631.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), sections 6.2 and 6.5.

  632. 632.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 6.3.

  633. 633.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 6.3.

  634. 634.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 6.4.

  635. 635.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), sections 5.1 and 5.2. See also Article 24 of Directive 2014/65/EU (MiFID II).

  636. 636.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 7.1.

  637. 637.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 7.2.

  638. 638.

    Nord Pool Spot AS, Trading Appendix 7, Ethical Guidelines (29 March 2011), section 7.3.

  639. 639.

    N2EX Physical Market, Trading Appendix 5, Market Conduct Rules (1 October 2014), section 1.1.1.

  640. 640.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 9.1.

  641. 641.

    N2EX Physical Market, General Trading Terms, Trading Rules (1 October 2014), section 18.1.

  642. 642.

    N2EX Physical Market, Trading Appendix 5, Market Conduct Rules (1 October 2014), Annex I.

  643. 643.

    N2EX Physical Market, Trading Appendix 5, Market Conduct Rules (1 October 2014), section 4.1.

  644. 644.

    N2EX Physical Market, Trading Appendix 5, Market Conduct Rules (1 October 2014), section 3.1.

  645. 645.

    NASDAQ OMX, Commodity Derivatives, Trading Appendix 6/Clearing Appendix 6, Market Conduct Rules (7 April 2014), section 6.1.

  646. 646.

    NASDAQ OMX, Commodity Derivatives, Trading Appendix 6/Clearing Appendix 6, Market Conduct Rules (7 April 2014), section 4.

  647. 647.

    Point (d) of Article 12 of Directive 2009/72/EC (Third Electricity Directive).

  648. 648.

    Commission Communication, Implementing the framework for financial markets: action plan, COM(1999) 232 final (11 May 1999).

  649. 649.

    Recital 1 of Directive 2003/6/EC (Directive on market abuse).

  650. 650.

    Recital 2 of Directive 2003/6/EC (Directive on market abuse).

  651. 651.

    Recitals 1 and 2 of Regulation 1227/2011 (REMIT).

  652. 652.

    Recitals 5 and 7–9 of Regulation 1227/2011 (REMIT). See also recitals 10 and 20 of Regulation 596/2014 (MAR).

  653. 653.

    Recital 2 of Regulation 1227/2011 (REMIT).

  654. 654.

    For securities markets, see Mäntysaari P (2010c), p. 211. Recital 1 of Regulation 1227/2011 (REMIT).

  655. 655.

    Recital 20 of Regulation 596/2014 (MAR).

  656. 656.

    Recital 8 of Regulation 1227/2011 (REMIT).

  657. 657.

    Article 6(2) of Regulation 1227/2011 (REMIT): “The delegated acts referred to in paragraph 1 shall take into account at least: (a) the specific functioning of wholesale energy markets, including the specificities of electricity and gas markets, and the interaction between commodity markets and derivative markets; (b) the potential for manipulation across borders, between electricity and gas markets and across commodity markets and derivative markets; (c) the potential impact on wholesale energy market prices of actual or planned production, consumption, use of transmission, or use of storage capacity; and (d) network codes and framework guidelines adopted in accordance with Regulations (EC) No 714/2009 and (EC) No 715/2009”.

  658. 658.

    Article 6(1) of Regulation 1227/2011 (REMIT).

  659. 659.

    Recital 20 of Regulation 596/2014 (MAR).

  660. 660.

    Article 1(2) of Regulation 1227/2011 (REMIT).

  661. 661.

    Recitals 1, 2 and 17 of Directive 2004/39/EC (MiFID); Article 5(1) of Directive 2004/39/EC (MiFID); Article 5(1) of Directive 2014/65/EU (MiFID II).

  662. 662.

    Recital 6 of Regulation 1227/2011 (REMIT).

  663. 663.

    Recital 4 of Regulation 1227/2011 (REMIT).

  664. 664.

    Article 35(1) of Directive 2009/72/EC (Third Electricity Directive).

  665. 665.

    Article 37(1)(j) of Directive 2009/72/EC (Third Electricity Directive).

  666. 666.

    Point (j) of Article 37(1) of Directive 2009/72/EC (Third Electricity Directive).

  667. 667.

    Article 37(2) of Directive 2009/72/EC (Third Electricity Directive).

  668. 668.

    Recitals 4 and 17 of Regulation 1227/2011 (REMIT).

  669. 669.

    Recitals 4 and 6 of Regulation 1227/2011 (REMIT).

  670. 670.

    Article 1(1) of Regulation 1227/2011 (REMIT). See also recital 17 of Regulation 1227/2011 (REMIT).

  671. 671.

    Second subparagraph of Article 7(2) of Regulation 1227/2011 (REMIT).

  672. 672.

    Article 1(2) of Regulation 1227/2011 (REMIT).

  673. 673.

    Article 1(3) and first subparagraph of Article 7(2) of Regulation 1227/2011 (REMIT). See also recital 22.

  674. 674.

    Article 7(1) of Regulation 1227/2011 (REMIT). See also recital 18.

  675. 675.

    Second subparagraph of Article 9(1) of Regulation 1227/2011 (REMIT).

  676. 676.

    Article 9(4) of Regulation 1227/2011 (REMIT).

  677. 677.

    Article 8(4) of Regulation 1227/2011 (REMIT).

  678. 678.

    Point 7 of Article 2 of Regulation 1227/2011 (REMIT): “… ‘market participant’ means any person, including transmission system operators, who enters into transactions, including the placing of orders to trade, in one or more wholesale energy markets; …”

  679. 679.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 17.

  680. 680.

    ACER Guidance, p. 19.

  681. 681.

    See also ACER Guidance, p. 16; recital 5 of Regulation 1227/2011 (REMIT).

  682. 682.

    Point 4 of Article 2 of Regulation 1227/2011 (REMIT). See also recital 5 of Regulation 1227/2011 (REMIT); ACER Guidance, p. 16.

  683. 683.

    ACER Guidance, p. 15.

  684. 684.

    Points 4 and 5 of Article 2 of Regulation 1227/2011 (REMIT). For the definition of the term “at full use” and the notion of “single economic entity” in point 5, see ACER Guidance, p. 14.

  685. 685.

    First subparagraph of Article 9(1) of Regulation 1227/2011 (REMIT).

  686. 686.

    Point 10 of Article 2 of Regulation 1227/2011 (REMIT).

  687. 687.

    Third subparagraph of Article 9(1) of Regulation 1227/2011 (REMIT).

  688. 688.

    Article 8(1) of Regulation 1227/2011 (REMIT).

  689. 689.

    Article 8(2) of Regulation 1227/2011 (REMIT).

  690. 690.

    Commission Implementing Regulation (EU) No 1348/2014 of 17 December 2014 on data reporting implementing Article 8(2) and Article 8(6) of Regulation (EU) No 1227/2011 of the European Parliament and of the Council on wholesale energy market integrity and transparency.

  691. 691.

    First subparagraph of Article 8(3) of Regulation 1227/2011 (REMIT). See also Article 58 of Directive 2014/65/EU (MiFID II) and Articles 9 and 10 of Regulation 648/2012 (EMIR).

  692. 692.

    Article 7(2) of Regulation 1227/2011 (REMIT). In the US, registered swap/SBS dealers and MSPs/MSBSPs are required to disclose swap and other related information with domestic regulators and FSOC. CFTC and SEC shall share information with foreign regulators. 7 USC §6 s(f) and 15 USC §78o-8.

  693. 693.

    Point 5 of Annex I (Guidelines on the management and allocation of available transfer capacity of interconnections between national systems) to Regulation 714/2009 (on conditions for access to the network for cross-border exchanges in electricity).

  694. 694.

    Regulation 543/2013 (on submission and publication of data in electricity markets and amending Annex I to Regulation 714/2009).

  695. 695.

    Recitals 2 and 3 of Regulation 543/2013.

  696. 696.

    Article 18 of Regulation 543/2013.

  697. 697.

    Point 23 of Article 2 of Regulation 543/2013.

  698. 698.

    Article 4(3) of Regulation 543/2013. See also recital 12.

  699. 699.

    Article 6 of Regulation 543/2013.

  700. 700.

    Article 16 of Regulation 543/2013.

  701. 701.

    Article 15 of Regulation 543/2013.

  702. 702.

    Article 7 of Regulation 543/2013.

  703. 703.

    Article 14 of Regulation 543/2013.

  704. 704.

    Article 8 of Regulation 543/2013.

  705. 705.

    Article 12 of Regulation 543/2013.

  706. 706.

    Article 4(1) of Regulation 543/2013.

  707. 707.

    Article 4(2) of Regulation 543/2013.

  708. 708.

    Article 4(1) of Regulation 543/2013.

  709. 709.

    Article 5 of Regulation 543/2013.

  710. 710.

    Recital 9 of Commission Regulation …/.. (CACM Regulation).

  711. 711.

    Articles 15 and 27 of Commission Regulation …/.. (CACM Regulation).

  712. 712.

    Article 12(6) Regulation 714/2009 (on conditions for access to the network for cross-border exchanges in electricity).

  713. 713.

    Article 17 of Regulation 596/2014 (MAR); Article 4 of Regulation 1227/2011 (REMIT).

  714. 714.

    Article 1(2) of Regulation 1227/2011 (REMIT).

  715. 715.

    Article 17(1) of Regulation 596/2014 (MAR). The duty to make a public disclosure is complemented by restrictions on selective disclosures. Article 17(8) Regulation 596/2014 (MAR).

  716. 716.

    See, for example, Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 7.1.1, and NASDAQ OMX, Trading Appendix 2/Clearing Appendix 2, Contract Specifications, Commodity Derivatives (24 November 2014), Part A, section 3.1.2: “The Exchange may admit new Exchange Listed Products by issuing Contract Specifications with standard terms for the relevant Product …”

  717. 717.

    First subparagraph of Article 2(1) of Regulation 596/2014 (MAR).

  718. 718.

    Second subparagraph of Article 2(1) of Regulation 596/2014 (MAR).

  719. 719.

    Article 2(2) of Regulation 596/2014 (MAR).

  720. 720.

    Point 11 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  721. 721.

    Article 2(4) of Regulation 1227/2011 (REMIT); ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 15.

  722. 722.

    Article 7(1) of Regulation 596/2014 (MAR).

  723. 723.

    Section C of Annex I to Directive 2014/65/EU (MiFID II).

  724. 724.

    Article 2(2) of Regulation 596/2014 (MAR).

  725. 725.

    Second subparagraph of Article 2(1) of Regulation 596/2014 (MAR).

  726. 726.

    Point 11 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  727. 727.

    First subparagraph of Article 2(1) of Regulation 596/2014 (MAR).

  728. 728.

    Recital 20 and points 15–16 of Article 3(1) of Regulation 596/2014 (MAR).

  729. 729.

    Point 7 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  730. 730.

    Point 6 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  731. 731.

    See, for example, recitals 8 and 11 of Regulation 1227/2011 (REMIT).

  732. 732.

    Articles 1(2) and 4(1) of Regulation 1227/2011 (REMIT).

  733. 733.

    Point 1 of Article 2 of Regulation 1227/2011 (REMIT).

  734. 734.

    Article 7(1) of Regulation 596/2014 (MAR).

  735. 735.

    Article 2(1)(a) of Regulation 1227/2011 (REMIT). ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), pp. 27–29.

  736. 736.

    Recital 12 of Regulation 1227/2011 (REMIT); ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 29.

  737. 737.

    Case C-19/11, Markus Geltl v Daimler AG, para 25 (on the definition of inside information under the Market Abuse Directive): “The definition of the notion of ‘inside information’ under point 1 of Article 1 of that directive comprises four essential elements. Firstly, it must be of a precise nature. Secondly, the information must not have been made public. Thirdly, it must relate, directly or indirectly, to one or more financial instruments or their issuers. Fourthly, it must be information which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments. The first and fourth elements are defined more specifically in Article 1(1) and (2) respectively of Directive 2003/124”.

  738. 738.

    Point 1 of Article 2 of Regulation 1227/2011 (REMIT).

  739. 739.

    Godager K (2009), § 18, number 40.

  740. 740.

    Godager K (2009), § 18, number 41.

  741. 741.

    Point 1 of Article 2 of Regulation 1227/2011 (REMIT).

  742. 742.

    Point 1(d) of Article 2 of Regulation 1227/2011 (REMIT).

  743. 743.

    Point 1(b) Article 2 of Regulation 1227/2011 (REMIT).

  744. 744.

    Article 7(1)(b) of Regulation 596/2014 (MAR).

  745. 745.

    Article 1(1) of Directive 2003/124 (implementing Directive 2003/6/EC).

  746. 746.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 29.

  747. 747.

    Case C-19/11, Markus Geltl v Daimler AG, para 29.

  748. 748.

    Point 1 of Article 2 of Regulation 1227/2011 (REMIT).

  749. 749.

    Article 7(3) of Regulation 596/2014 (MAR): “An intermediate step in a protracted process shall be deemed to be inside information if, by itself, it satisfies the criteria of inside information as referred to in this Article”. See also Article 7(2) of Regulation 596/2014 (MAR) on the “precise nature” of information.

  750. 750.

    Case C-19/11, Markus Geltl v Daimler AG, para 40.

  751. 751.

    Case C-19/11, Markus Geltl v Daimler AG, para 56.

  752. 752.

    Case C-19/11, Markus Geltl v Daimler AG, para 45.

  753. 753.

    Case C-19/11, Markus Geltl v Daimler AG, para 46.

  754. 754.

    Case C-19/11, Markus Geltl v Daimler AG, para 48.

  755. 755.

    Case C-19/11, Markus Geltl v Daimler AG, para 49.

  756. 756.

    Article 7(3) of Regulation 596/2014 (MAR). See also Article 7(2) of Regulation 596/2014 (MAR) on the “precise nature” of information.

  757. 757.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  758. 758.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  759. 759.

    Article 4(3) of Regulation 1227/2011 (REMIT).

  760. 760.

    Article 1(2) of Regulation 1227/2011 (REMIT); ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 11.

  761. 761.

    Article 17 of Regulation 596/2014 (MAR).

  762. 762.

    Points 4–8 of Article 2 of Regulation 1227/2011 (REMIT).

  763. 763.

    Second subparagraph of Article 9(1) of Regulation 1227/2011 (REMIT).

  764. 764.

    Recital 11 of Regulation 1227/2011 (REMIT).

  765. 765.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  766. 766.

    See Articles 5 and 17(1) of Regulation 596/2014 (MAR).

  767. 767.

    Points 7 and 8 of Article 2 of Regulation 1227/2011 (REMIT).

  768. 768.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  769. 769.

    Point 12 of Article 2 of Regulation 1227/2011 (REMIT) on parent undertakings; point 13 of Article 2 of Regulation 1227/2011 (REMIT) on related undertakings; Article 12(1) of Directive 83/349/EEC (Seventh Company Law Directive) on consolidated accounts.

  770. 770.

    Article 4(3) of Regulation 1227/2011 (REMIT).

  771. 771.

    Article 4(3) of Regulation 1227/2011 (REMIT).

  772. 772.

    Point 1 of Article 2 of Regulation 1227/2011 (REMIT).

  773. 773.

    Article 7(1) of Regulation 596/2014 (MAR).

  774. 774.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  775. 775.

    Article 17(1) of Regulation 596/2014 (MAR).

  776. 776.

    Article 17(2) of Regulation 596/2014 (MAR).

  777. 777.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  778. 778.

    Article 4(2) of Regulation 1227/2011 (REMIT).

  779. 779.

    Article 17(4) of Regulation 596/2014 (MAR).

  780. 780.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  781. 781.

    Second subparagraph of Article 17(1) of Regulation 596/2014 (MAR).

  782. 782.

    Second subparagraph of Article 17(1) of Regulation 596/2014 (MAR).

  783. 783.

    Article 6(10) of Directive 2003/6/EC (Directive on market abuse).

  784. 784.

    Article 4(4) of Regulation 1227/2011 (REMIT): “The publication of inside information, including in aggregated form, in accordance with Regulation (EC) No 714/2009 or (EC) No 715/2009, or guidelines and network codes adopted pursuant to those Regulations constitutes simultaneous, complete and effective public disclosure”.

  785. 785.

    Articles 4(6) and 1(2) of Regulation 1227/2011 (REMIT).

  786. 786.

    Article 4(1) of Regulation 1227/2011 (REMIT).

  787. 787.

    Article 4(3) of Regulation 1227/2011 (REMIT).

  788. 788.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), pp. 44 and 59.

  789. 789.

    ACER Guidance, pp. 42–43.

  790. 790.

    See also Case C-19/11, Markus Geltl v Daimler AG, paras 33–34.

  791. 791.

    Article 4(2) of Regulation 1227/2011 (REMIT).

  792. 792.

    Article 4(2) of Regulation 1227/2011 (REMIT).

  793. 793.

    Article 3(1) of Directive 2003/124 (implementing Directive 2003/6/EC).

  794. 794.

    See Case C-19/11, Markus Geltl v Daimler AG.

  795. 795.

    Second subparagraph of Article 17(4) of Regulation 596/2014 (MAR).

  796. 796.

    Recital 24 of Directive 2003/6/EC (Directive on market abuse). Case C-19/11, Markus Geltl v Daimler AG, para 34.

  797. 797.

    Article 4(3) of Regulation 1227/2011 (REMIT) and Article 17(8) of Regulation 596/2014 (MAR). See also first subparagraph of Article 17(4) of Regulation 596/2014 (MAR).

  798. 798.

    Regulation 714/2009 (on conditions for access to the network for cross-border exchanges in electricity); Articles 4(5) and 4(7) of Regulation 1227/2011 (REMIT).

  799. 799.

    Article 4(7) of Regulation 1227/2011 (REMIT).

  800. 800.

    See, for example, EPEX Spot Code of Conduct (9 July 2012), section 1(2).

  801. 801.

    EPEX Spot Code of Conduct (9 July 2012); EEX Code of Conduct (24 June 2010); N2EX Physical Market, Trading Appendix 5, Market Conduct Rules (1 October 2014).

  802. 802.

    Nord Pool Spot Physical Market, Trading Appendix 5, Market Conduct Rules (7 January 2014), section 5.1.

  803. 803.

    Ibid, section 5.2.

  804. 804.

    Ibid, section 5.3.

  805. 805.

    Ibid, section 5.4.

  806. 806.

    NASDAQ OMX, Commodity Derivatives, Trading Appendix 6/Clearing Appendix 6, Market Conduct Rules (7 April 2014), section 4.1.

  807. 807.

    Ibid, section 4.2.

  808. 808.

    Ibid, section 4.3: “An Exchange Member is, independent of the disclosure duties of its clients, under an obligation to disclose to the Exchange the information concerning clients as provided for in this Section 4, if and when the Exchange Member possesses such information”. Section 4.2: “The disclosure requirements in section 4.1 apply with the following exceptions: … c. information that an Exchange Member receives regarding a client, as well as any other information conveyed by a client to an Exchange Member related to the client’s pending Orders”.

  809. 809.

    Article 3(1) of Regulation 1227/2011 (REMIT).

  810. 810.

    Article 14 of Regulation 596/2014 (MAR).

  811. 811.

    Point 8 of Article 2 of Regulation 1227/2011 (REMIT).

  812. 812.

    Article 8 of Regulation 596/2014 (MAR); Article 3 of Regulation 1227/2011 (REMIT).

  813. 813.

    Article 3(5) of Regulation 1227/2011 (REMIT); Article 8(5) of Regulation 596/2014 (MAR).

  814. 814.

    Article 3(2) of Regulation 1227/2011 (REMIT); Article 8(4) of Regulation 596/2014 (MAR).

  815. 815.

    See Recital 8 of Regulation 1227/2011 (REMIT).

  816. 816.

    Article 3(1) of Regulation 1227/2011 (REMIT); Article 14 of Regulation 596/2014 (MAR).

  817. 817.

    FCA Handbook, MAR 1.3.2(2) (1 April 2013). Recital 19 of Directive 2003/6/EC (Directive on market abuse) and recital 30 of Regulation 596/2014 (MAR).

  818. 818.

    See Article 3(5) of Regulation 1227/2011 (REMIT).

  819. 819.

    Article 9(1) of Regulation 596/2014 (MAR).

  820. 820.

    Article 3(3) of Regulation 1227/2011 (REMIT).

  821. 821.

    Article 3(4) of Regulation 1227/2011 (REMIT); Article 9(3) of Regulation 596/2014 (MAR).

  822. 822.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 50: “… the Agency considers that the market participant is obliged to refrain from any amendment or selective withdrawal of the order placed (‘hands-off approach’) in order to comply with the prohibition of insider trading”.

  823. 823.

    Point (b) of Article 3(4) of Regulation 1227/2011 (REMIT).

  824. 824.

    Article 3(4) of Regulation 1227/2011 (REMIT).

  825. 825.

    Article 3(1)(b) of Regulation 1227/2011 (REMIT); Article 10(1) of Regulation 596/2014 (MAR).

  826. 826.

    Article 11(1) of Regulation 596/2014 (MAR).

  827. 827.

    Recital 15 and Article 3(6) of Regulation 1227/2011 (REMIT); Article 21 of Regulation 596/2014 (MAR).

  828. 828.

    Kumar P and Seppi DJ (1992).

  829. 829.

    Pirrong C (2001), pp. 222–223.

  830. 830.

    Article 15 of Regulation 596/2014 (MAR). Article 5 of Regulation 1227/2011 (REMIT). For the definition of market manipulation, see Article 12 of Regulation 596/2014 (MAR). Recital 13 of Regulation 1227/2011 (REMIT).

  831. 831.

    Recital 13 of Regulation 1227/2011 (REMIT).

  832. 832.

    See also Article 6(2) of Regulation 1227/2011 (REMIT). For manipulation in the US markets, see the sources cited in Ledgerwood S and Harris D (2012), footnote 13: Fischel DR and Ross DJ (1991); Kumar P and Seppi DJ (1992); Pirrong C (2001).

  833. 833.

    Recital 13 of Regulation 1227/2011 (REMIT); Godager K (2009), § 18, number 42.

  834. 834.

    Article 5 of Regulation 1227/2011 (REMIT).

  835. 835.

    Point 2 of Article 2 of Regulation 1227/2011 (REMIT).

  836. 836.

    Article 4 of Directive 2003/124/EC (implementing Directive 2003/6/EC) (on manipulative behaviour related to false or misleading signals and to price securing).

  837. 837.

    Article 5 of Directive 2003/124/EC.

  838. 838.

    Section A of Annex I to Regulation 596/2014 (MAR).

  839. 839.

    Section B of Annex I to Regulation 596/2014 (MAR).

  840. 840.

    Case C-445/09 IMC Securities BV v Stichting Autoriteit Financiële Markten, paras 29–30.

  841. 841.

    For the prohibition of electric energy market manipulation, see 18 C.F.R. § 1c.2(a).

  842. 842.

    Recital 44 of Regulation 596/2014 (MAR).

  843. 843.

    Point 2(b) of Article 2 of Regulation 1227/2011 (REMIT).

  844. 844.

    Point 3 of Article 2 of Regulation 1227/2011 (REMIT).

  845. 845.

    Point 3 of Article 2 of Regulation 1227/2011 (REMIT).

  846. 846.

    Article 12 of and Annex I to Regulation 596/2014 (MAR).

  847. 847.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), pp. 36–38.

  848. 848.

    Recital 13 of Regulation 1227/2011 (REMIT).

  849. 849.

    Recital 14 of Regulation 1227/2011 (REMIT).

  850. 850.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), pp. 52–53.

  851. 851.

    Ledgerwood S and Harris D (2012), p. 23.

  852. 852.

    Pirrong C (2010), pp. 1–5.

  853. 853.

    Point 2(a)(ii) of Article 2 of Regulation 1227/2011 (REMIT); point 3(a)(ii) of Article 2 of Regulation 1227/2011 (REMIT). See also recital 14: “… accepted market practices such as those applying in the financial services area … could be a legitimate way for market participants to secure a favourable price for a wholesale energy product”.

  854. 854.

    Article 13(1) of Regulation 596/2014 (MAR).

  855. 855.

    Article 1(5) of Directive 2003/6/EC (Directive on market abuse).

  856. 856.

    Article 13 of Regulation 596/2014 (MAR).

  857. 857.

    Second subparagraph of Article 13(2) of Regulation 596/2014 (MAR).

  858. 858.

    Article 13(9) of Regulation 596/2014 (MAR).

  859. 859.

    Article 6(1) of Regulation 1227/2011 (REMIT).

  860. 860.

    Article 16(1) and recital 27 of Regulation 1227/2011 (REMIT).

  861. 861.

    ACER, Guidance on the application of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency, 3rd edn (29 October 2013), p. 56.

  862. 862.

    Ledgerwood S and Harris D (2012), p. 19.

  863. 863.

    Ledgerwood S and Harris D (2012), p. 1.

  864. 864.

    See Ledgerwood S and Carpenter P (2012), pp. 258–259.

  865. 865.

    7 USC § 9(3).

  866. 866.

    7 USC § 6c(a)(2).

  867. 867.

    7 USC § 6c(a)(5).

  868. 868.

    7 USC § 6c(b).

  869. 869.

    17 CFR § 180.1(a). See Abrantes-Metz M et al. (2013), p. 392.

  870. 870.

    17 CFR § 180.2.

  871. 871.

    For the problem of competing FERC and CFTC jurisdictions, see US Senate Committee on Energy and Natural Resources (2010), statement of Vincent P. Duane.

  872. 872.

    Fischel DR and Ross DJ (1991), pp. 504 and 506. See also p. 507 where the authors recommend the concept of manipulation to be abandoned.

  873. 873.

    See Spence DB and Prentice R (2012), pp. 172–173.

  874. 874.

    The Energy Independence and Security Act of 2007.

  875. 875.

    The Food, Conservation, and Energy Act of 2008.

  876. 876.

    The SEC’s anti-manipulation rule is codified at 17 CFR § 240.10b-5 (2011) (promulgated under the authority granted in 15 USC § 78j(b) (Supp. 2010)).

  877. 877.

    The CFTC Anti-Manipulation Rule is codified at 7 USC § 13b (Supp. 2010).

  878. 878.

    Ledgerwood S and Carpenter P (2012), p. 254; Abrantes-Metz M et al. (2013), p. 359: “… the CFTC has won only one case in thirty-seven years”.

  879. 879.

    See Ledgerwood S and Harris D (2012), footnote 6.

  880. 880.

    Ledgerwood S and Harris D (2012), footnotes 8 and 9.

  881. 881.

    The authority is based on 15 USC § 78j (2006).

  882. 882.

    Order No. 670, Prohibition of Energy Market Manipulation, FERC Stats. & Regs. P 31,202, 71 Fed. Reg. 4,244 (2006) (codified at 18 CFR pt. 1c).

  883. 883.

    18 CFR § 1c.2.

  884. 884.

    See Ledgerwood S and Harris D (2012), p. 6.

  885. 885.

    7 USC §§ 9, 15 (2012). See Abrantes-Metz M et al. (2013), p. 392.

  886. 886.

    Godager K (2009), § 18, number 44.

  887. 887.

    See, for example, Nord Pool Spot, Quarterly report for Market Surveillance 1 July to 30 September 2014. 99 written investigations were initiated in 2013. The number of statements of breach/non-public warnings was 46. Of these, 44 related to disclosure requirements, two to insider trading, and one (also) to good business conduct. There were no cases of market manipulation in 2013. During Q1–Q3 in 2014, no cases of market manipulation were found.

  888. 888.

    See FERC (2003). See also McLean B and Elkind P (2004), Chapter 17.

  889. 889.

    Enron Power Marketing, Inc., 119 FERC ¶ 63,013 (Initial Decision) (issued 21 June 2007) number 76.

  890. 890.

    FERC (2003), VI-4.

  891. 891.

    FERC (2003), VI-1 and VI-8.

  892. 892.

    FERC (2003), VI-19 and VI-20 (citing the Enron manager’s Plea Agreement dated 3 February 2003).

  893. 893.

    Enron Power Marketing, Inc., 119 FERC ¶ 63,013 (Initial Decision) (issued 21 June 2007) number 76: “… evidence that Enron engaged in Circular Scheduling/Death Star Transactions, ‘Get Shorty’ Transactions, Selling Non-Firm Energy as Firm, Load Shifts, Ricochet Transactions/False Import, Non-Firm Export Transactions and Wheel-Out Transactions in the California electricity markets”.

  894. 894.

    Article 5 of Regulation 1227/2011 (REMIT).

  895. 895.

    Point 4 of Article 2 of Regulation 1227/2011 (REMIT). See also recital 5 of Regulation 1227/2011 (REMIT).

  896. 896.

    See also Case C-445/09 IMC Securities BV v Stichting Autoriteit Financiële Markten, recital 29.

  897. 897.

    Point (c) of Article 12(1) of Regulation 596/2014 (MAR).

  898. 898.

    Point 2(b) of Article 2 of Regulation 1227/2011 (REMIT).

  899. 899.

    For instance, communications can be made to a representative of the media after which the same information is disseminated in the media, and a fabricated rumour can be communicated to one recipient who is likely to disseminate it to a wider group of people.

  900. 900.

    FERC (2003), VI-20 and VI-24. See also U.S. Energy Information Administration (2002), Chapter 4.

  901. 901.

    U.S. Energy Information Administration (2002), Chapter 4.

  902. 902.

    Ibid.

  903. 903.

    FERC, Staff Notice of Alleged Violations (December 15, 2011).

  904. 904.

    Deutsche Bank Energy Trading, LLC, 142 FERC ¶ 61,056 (January 22, 2013); FERC, News Release, FERC Approves Market Manipulation Settlement with Deutsche Bank, Docket No. IN12-4-000 (January 22, 2013).

  905. 905.

    FERC, Staff Notice of Alleged Violations (January 30, 2012).

  906. 906.

    FERC, Staff Notice of Alleged Violations (April 5, 2012).

  907. 907.

    BBC, Barclays faces $470 m energy fine from US regulators (1 November 2012).

  908. 908.

    Barclays Bank PLC, 144 FERC ¶ 61,041 Docket No. IN08-8-000 (July 16, 2013).

  909. 909.

    Federal Energy Regulatory Commission v. Barclays Bank Plc, 13-01158, U.S. District Court, Eastern District of California (Sacramento).

  910. 910.

    Article 1(1) of Directive 2005/60/EC (Directive on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing). For conduct regarded as money laundering, see Article 1(2). For the scope of the Money Laundering Regulations 2007 in the UK, see section 3 of the Regulation.

  911. 911.

    Position rules, boundary rules, authority rules, scope rules, aggregation rules, information rules, and payoff rules. Ostrom E (2005), p. 835.

  912. 912.

    See, for example, ISDA (2011): “In principle, ISDA supports steps towards more convergence, without duplication, between regulation of physical commodity markets and financial markets and regulatory initiatives designed to improve the safety, soundness and functioning of these markets”.

  913. 913.

    Ostrom E (2005), p. 835.

  914. 914.

    Article 1(2) of Directive 2014/65/EU (MiFID II).

  915. 915.

    Article 14 of Regulation 648/2012 (EMIR).

  916. 916.

    Article 28–29 of Directive 2013/36/EU (CRD IV); Articles 92 and 95–96 of Regulation 575/2013 (CRR).

  917. 917.

    Articles 16 of Regulation 648/2012 (EMIR).

  918. 918.

    Article 4(1) of Regulation 648/2012 (EMIR).

  919. 919.

    Article 29(1) of Regulation 600/2014 (MiFIR).

  920. 920.

    See Article 24 of Directive 2014/65/EU (MiFID II).

  921. 921.

    See, for example, Article 24(3) of Directive 2014/65/EU (MiFID II).

  922. 922.

    See, for example, Article 17 of Regulation 596/2014 (MAR).

  923. 923.

    Articles 3(1) and 7 of Directive 2003/71/EC (Prospectus Directive).

  924. 924.

    Article 16 of Directive 2014/65/EU (MiFID II). See also Directive 2006/73/EC (implementing Directive 2004/39/EC).

  925. 925.

    MiFID II is complemented by Regulation 600/2014 (MiFIR). The MiFID regime consisted of a framework Directive (Directive 2004/39/EC), an Implementing Directive (Directive 2006/73/EC) and an Implementing Regulation (Regulation 1287/2006).

  926. 926.

    See, for example, recitals 14 and 58 of Directive 2014/65/EU (MiFID II); Proposal for a Directive on markets in financial instruments, COM(2011) 656 final, Explanatory memorandum, section 3.4.1.

  927. 927.

    For the previous exemptions for commodity firms, see, in particular, Article 2(1)(i) and (k) of Directive 2004/39/EC (MiFID).

  928. 928.

    Section C of Annex I to Directive 2014/65/EU (MiFID II).

  929. 929.

    Point 7 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  930. 930.

    Point 4 of Article 2 of Regulation 1227/2011 (REMIT).

  931. 931.

    Point 6 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  932. 932.

    Recital 9 of Directive 2014/65/EU (MiFID II). On the other hand, see recital 10 of Directive 2014/65/EU (MiFID II): “The limitation of the scope concerning commodity derivatives traded on an OTF and physically settled should be limited to avoid a loophole that may lead to regulatory arbitrage. It is therefore necessary to provide for a delegated act to further specify the meaning of the expression ‘must be physically settled’ taking into account at least the creation of an enforceable and binding obligation to physically deliver, which cannot be unwound and with no right to cash settle or offset transactions except in the case of force majeure, default or other bona fide inability to perform”.

  933. 933.

    Articles 38 and 39 of Regulation 1287/2006 (MiFID Implementing Regulation).

  934. 934.

    DG Internal Market and Services, Public Consultation, Review of the Markets in Financial Instruments Directive (MIFID) (8 December 2010), section 5.3.

  935. 935.

    See also letter of 14 February 2014 from ESMA to Commissioner Michel Barnier (Re: Classification of financial instruments as derivatives), number 12 of ANNEX I: “Differences arise, in particular for FX forwards, depending on the settlement or delivery date, i.e. the frontier between an FX spot and an FX derivative. From the analysis carried out by ESMA, it is not controversial that contracts that settle within two trading days are considered spot contracts and that contracts that settle after seven trading days are FX forwards. In certain countries the contracts that settle up to 7 days are not deemed to be derivatives. Therefore, for contracts with a settlement date between 3 and 7 trading days there are different national laws, in some Member States, determining whether they are or not a derivative. For these FX forwards there is not a common definition and, therefore, they are not clearly identified as derivatives across the Union”.

  936. 936.

    First subparagraph of Article 38(2) of Regulation 1287/2006 (implementing Article 4(1)(2) of Directive 2004/39/EC).

  937. 937.

    Recital 14 of Regulation 1031/2010 (Auctioning Regulation).

  938. 938.

    DG Internal Market and Services, Public Consultation, Review of the Markets in Financial Instruments Directive (MIFID) (8 December 2010), section 5.3.

  939. 939.

    BaFin (2011), sections II.2.b, II.2.c and II.2.d.

  940. 940.

    BaFin (2011), section II.1.b. See also Hünerwadel A (2007), pp. 59–60.

  941. 941.

    Article 38(4) of Regulation 1287/2006 (MiFID Implementing Regulation) (implementing Article 4(1)(2) of MiFID).

  942. 942.

    Article 2(1)(n) of Directive 2014/65/EU (MiFID II).

  943. 943.

    For instance, EPEX Spot defines its electricity spot contracts as commercial contracts. EPEX Spot Exchange Rules (28 November 2014), Article 5.1.

  944. 944.

    Point 6 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  945. 945.

    Point 5 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  946. 946.

    Point 7 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  947. 947.

    Point 11 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  948. 948.

    First subparagraph of Article 57(1) of Directive 2014/65/EU (MiFID II).

  949. 949.

    Article 57(2) of Directive 2014/65/EU (MiFID II).

  950. 950.

    Second subparagraph of Article 57(1) of Directive 2014/65/EU (MiFID II).

  951. 951.

    Recital 9 of Directive 2014/65/EU (MiFID II). See also point 58 of Article 4(1) of Directive 2014/65/EU (MiFID II) and point 4 of Article 2 of Regulation 1227/2011 (REMIT).

  952. 952.

    Point 16 of Article 4(1) of Directive 2014/65/EU (MiFID II).

  953. 953.

    Point 6 of Section C of Annex I to Directive 2014/65/EU (MiFID II). See also Article 95 of Directive 2014/65/EU (MiFID II).

  954. 954.

    Point 6 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  955. 955.

    Point 11 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  956. 956.

    Article 1 of Directive 2003/87/EC (Emissions Trading Scheme Directive).

  957. 957.

    Point (a) of Article 3 of Directive 2003/87/EC (Emissions Trading Scheme Directive).

  958. 958.

    See point 10 of Section C of Annex I to Directive 2004/39/EC (MiFID). See also Articles 38(3) and 39 of Regulation 1287/2006 (MiFID Implementing Regulation). For the legal aspects of emission allowances, see The Financial Markets Law Committee, Issue 116—Emission Allowances: Creating Legal Certainty (October 2009).

  959. 959.

    See Article 37(e) of Regulation 1287/2006 (MiFID Implementing Regulation).

  960. 960.

    Point 24 of Article 4(1) of Directive 2014/65/EU (MiFID).

  961. 961.

    Article 28 of Regulation 600/2014 (MiFIR); Articles 10(1)(b) and 2(5) of Regulation 648/2012 (EMIR).

  962. 962.

    Section 3.4.1 of the Explanatory Memorandum, COM(2011) 656 final. Recital 10 of Regulation 600/2014 (MiFIR).

  963. 963.

    Article 1(1) of Directive 2014/65/EU (MiFID II). For German law, see BaFin (2011).

  964. 964.

    Point 1 of Article 4(1) of Directive 2014/65/EU (MiFID II).

  965. 965.

    Article 1 of Regulation 648/2012 (EMIR).

  966. 966.

    Point 7 of Article 2 of Regulation 648/2012 (EMIR).

  967. 967.

    Point 1 of Article 4(1) of Directive 2014/65/EU (MiFID II).

  968. 968.

    Section A of Annex I to Directive 2014/65/EU (MiFID II).

  969. 969.

    BaFin (2011), III.5.

  970. 970.

    Deutsche Bundesbank (2013), section 2.

  971. 971.

    Article 6(3) of Directive 2014/65/EU (MiFID II).

  972. 972.

    § 53b(1) KWG. See also Hünerwadel A (2007), pp. 60–61.

  973. 973.

    § 32(1) KWG. See also Hünerwadel A (2007), p. 61.

  974. 974.

    § 2(4) KWG. See Hünerwadel A (2007), p. 61.

  975. 975.

    Article 4(1)(1) of Directive 2014/65/EU (MiFID II).

  976. 976.

    Point (n) of Article 2(1) of Directive 2014/65/EU (MiFID II).

  977. 977.

    Point (d) of Article 2(1) of Directive 2014/65/EU (MiFID II).

  978. 978.

    Point (i) of Article 2(1) of Directive 2014/65/EU (MiFID II).

  979. 979.

    Point (k) of Article 2(1) of Directive 2004/39/EC (MiFID).

  980. 980.

    Recital 25 of Directive 2004/39/EC (MiFID).

  981. 981.

    Article 2(1)(i) and (k) of Directive 2004/39/EC (MiFID) exempts the same firms from the Capital Requirements Directive (CRD) as well.

  982. 982.

    See Ministére de l’économie, de l’industrie et de l’emploi (2010), pp. 52–53.

  983. 983.

    Recital 25 of Directive 2004/39/EC (MiFID). See also points (b), (d), (i), (k) and (l) of Article 2(1) of Directive 2004/39/EC (MiFID).

  984. 984.

    CESR-CEBS Technical Advice to the European Commission on the review of commodities business, 15 October 2008, CESR/08-752; DG Internal Market and Services, Public Consultation, Review of the Markets in Financial Instruments Directive (MIFID) (8 December 2010), section 5.2.

  985. 985.

    Articles 16(1) and 16(2) of Regulation 648/2012 (EMIR).

  986. 986.

    Article 2(1) of Directive 2014/65/EU (MiFID II).

  987. 987.

    Point 2(b) of Article 4(1) of Regulation 575/2013 (CRR). Point 4 of Article 4(1) of Regulation 575/2013 (CRR).

  988. 988.

    Point 2(c) of Article 4(1) of Regulation 575/2013 (CRR). See already point (b)(iii) of Article 3(1) of Directive 2006/49/EC (Capital Requirements Directive).

  989. 989.

    Recital 63 of Regulation 575/2013 (CRR).

  990. 990.

    First subparagraph of Article 498(1) of Regulation 575/2013 (CRR).

  991. 991.

    Second subparagraph of Article 498(1) of Regulation 575/2013 (CRR).

  992. 992.

    Article 498(2) of Regulation 575/2013 (CRR).

  993. 993.

    Article 4(1) of Regulation 648/2012 (EMIR).

  994. 994.

    Articles 4(1), 5(1) and 5(2) of Regulation 648/2012 (EMIR).

  995. 995.

    Recital 33 of Regulation 648/2012 (EMIR).

  996. 996.

    Recital 37 of Regulation 600/2014 (MiFIR).

  997. 997.

    Article 29 of Regulation 600/2014 (MiFIR).

  998. 998.

    Point 6 of Section C of Annex I to Directive 2014/65/EU (MiFID II).

  999. 999.

    Article 95(1) of Directive 2014/65/EU (MiFID II).

  1000. 1000.

    Article 95(2) of Directive 2014/65/EU (MiFID II).

  1001. 1001.

    Article 4(1) of Regulation 648/2012 (EMIR).

  1002. 1002.

    Article 7(1) of Regulation 648/2012 (EMIR).

  1003. 1003.

    Recital 33 and Article 4(3) of Regulation 648/2012 (EMIR).

  1004. 1004.

    Articles 28(1), 29(1), 35(1) 36 and 38 of Regulation 600/2014 (MiFIR).

  1005. 1005.

    Recital 28 of Regulation 600/2014 (MiFIR).

  1006. 1006.

    See ISDA (2011).

  1007. 1007.

    Point 8 of Article 2 of Regulation 648/2012 (EMIR).

  1008. 1008.

    Point 9 of Article 2 of Regulation 648/2012 (EMIR).

  1009. 1009.

    Article 1(1) of Regulation 648/2012 (EMIR).

  1010. 1010.

    Article 4(1) of Regulation 648/2012 (EMIR).

  1011. 1011.

    Article 10 of Regulation 648/2012 (EMIR).

  1012. 1012.

    Article 8 of Regulation 600/2014 (MiFIR).

  1013. 1013.

    Article 6 of Regulation 600/2014 (MiFIR).

  1014. 1014.

    Article 21(2) of Directive 2014/65/EU (MiFID II).

  1015. 1015.

    Article 22 of Directive 2014/65/EU (MiFID II).

  1016. 1016.

    Article 24(1) of Directive 2014/65/EU (MiFID II).

  1017. 1017.

    For investment firms, see first subparagraph of Article 9(3) of Directive 2014/65/EU (MiFID II). For market operators, see first subparagraph of Article 45(6) of Directive 2014/65/EU (MiFID II).

  1018. 1018.

    Article 22 of Directive 2014/65/EU (MiFID II).

  1019. 1019.

    Article 56(1) of Directive 2014/65/EU (MiFID II).

  1020. 1020.

    First subparagraph of Article 54(2) of Directive 2014/65/EU (MiFID II).

  1021. 1021.

    First subparagraph of Article 31(2) of Directive 2014/65/EU (MiFID II).

  1022. 1022.

    Article 21(1) of Directive 2014/65/EU (MiFID II).

  1023. 1023.

    Article 21(2) of Directive 2014/65/EU (MiFID II).

  1024. 1024.

    Article 58 of Directive 2014/65/EU (MiFID II). Complemented by Level 3 Guidelines, MiFID I established a transaction reporting regime. CESR Level 3 Guidelines on MiFID Transaction Reporting (May 2007). See also CESR, Guidance: How to report transactions on OTC derivative instruments (8 October 2010).

  1025. 1025.

    Proposal for a Regulation on markets in financial instruments, COM(2011) 652 final, Explanatory memorandum, section 3.4.7.

  1026. 1026.

    Article 16(1) of Directive 2014/65/EU (MiFID II).

  1027. 1027.

    Second subparagraph of Article 16(5) of Directive 2014/65/EU (MiFID II). See also first subparagraph of Article 16(5) of Directive 2014/65/EU (MiFID II) on restrictions on outsourcing and the use of third parties.

  1028. 1028.

    Article 16(6) of Directive 2014/65/EU (MiFID II).

  1029. 1029.

    First subparagraph of Article 9(3) of Directive 2014/65/EU (MiFID II).

  1030. 1030.

    Article 9(3) of Directive 2014/65/EU (MiFID II).

  1031. 1031.

    Third subparagraph of Article 9(3) of Directive 2014/65/EU (MiFID II). See also fourth subparagraph of Article 9(3) of Directive 2014/65/EU (MiFID II).

  1032. 1032.

    Nord Pool Spot, Exchange Information, No. 24/2011—Separation of the joint Market Surveillance function of Nord Pool Spot and NASDAQ OMX Commodities Europe.

  1033. 1033.

    Nord Pool Spot, Exchange Information, No. 42/2011—Separation of the joint Market Surveillance function of Nord Pool Spot and Nasdaq OMX Commodities Europe.

  1034. 1034.

    See Energy Market Authority, Finland (2013), pp. 39–41.

  1035. 1035.

    See, for example, Lanz M et al. (2011), section 4.4.4, p. 131.

  1036. 1036.

    See, for example, NordREG (2008), pp. 9–10; Lanz M et al. (2011), section 4.4.4, pp. 131–132.

  1037. 1037.

    For the Nordic market, see Rud L (2009).

  1038. 1038.

    For reform proposals, see NBS Design (Svenska Kraftnät, Statnett, Energinet.dk, Fingrid, Nordic Balance Settlement (NBS). Common Balance & Reconciliation Settlement Design (26 January 2011).

  1039. 1039.

    NBS Design, p. 10: “The NBS-model is based on the general assumption that a common Nordic body, a so called Settlement Responsible (SR), performs the balance settlement and manages invoicing as well as collaterals towards the Balance Responsible Parties (BRP) on behalf of the Transmission System Operator (TSO) in each country … The ambition is to create a full Nordic end user market for electricity in the Nordic region”.

  1040. 1040.

    For the definition of balancing, see Article 2 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1041. 1041.

    Recitals 4 and 5 of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1042. 1042.

    Recital 18 and point 7 of Article 2 of Regulation 1227/2001 (REMIT).

  1043. 1043.

    Point 4 of Article 2 of Regulation 1227/2001 (REMIT).

  1044. 1044.

    Article 1(1) of Regulation 648/2012 (EMIR).

  1045. 1045.

    Recital 35 and point n of Article 2(1) of Directive 2014/65/EU (MiFID II).

    of Directive 2014/65/EU (MiFID II).

  1046. 1046.

    Point 1 of Article 2 of Regulation 648/2012 (EMIR).

  1047. 1047.

    Point 7 of Article 2 of Regulation 648/2012 (EMIR).

  1048. 1048.

    Articles 11(3) and 41(1) of Regulation 648/2012 (EMIR).

  1049. 1049.

    Article 3(3) of Regulation 1227/2011 (REMIT).

  1050. 1050.

    Point 4 of Article 2 of Regulation 1227/2001 (REMIT): “‘wholesale energy products’ means the following contracts and derivatives, irrespective of where and how they are traded: (a) contracts for the supply of electricity or natural gas where delivery is in the Union …”

  1051. 1051.

    Article 4(5) of Regulation 1227/2011 (REMIT).

  1052. 1052.

    Joskow PL (2008), pp. 160–161.

  1053. 1053.

    Hotakainen M and Klimstra J (2011), p. 134.

  1054. 1054.

    Rious V et al. (2012), section 4.1.1.

  1055. 1055.

    Finon D and Pignon V (2008); Rious V et al. (2012), Table 4 and section 4.1.2.

  1056. 1056.

    Article 15(6) of Directive 2009/72/EC (Third Electricity Directive).

  1057. 1057.

    Rious V et al. (2012), section 4.1.1.

  1058. 1058.

    See Rious V et al. (2012), section 4.1.2; Joskow PL (2008), pp. 168–169.

  1059. 1059.

    Joskow PL (2008), pp. 160–161.

  1060. 1060.

    See Wolfram CD (1998, 1999).

  1061. 1061.

    Joskow PL (2008), p. 168.

  1062. 1062.

    Rious V et al. (2012), section 4.1.3; Joskow PL (2008), p. 168.

  1063. 1063.

    Article 15(6) of Directive 2009/72/EC (Third Electricity Directive).

  1064. 1064.

    See Article 1(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014). For the definitions of primary control (Primärregelleistung) and secondary control (Sekundärregelleistung), see also BNetzA (the German Federal Network Agency), decision BK6-10-098 of 12 April 2011.

  1065. 1065.

    Article 29(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1066. 1066.

    Article 34(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1067. 1067.

    Article 34 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1068. 1068.

    Article 36 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1069. 1069.

    Article 35 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1070. 1070.

    Article 37 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1071. 1071.

    THEMA Consulting Group (2014), p. 38.

  1072. 1072.

    Madlener R and Kaufmann M (2002).

  1073. 1073.

    See, for example, Lanz M et al. (2011), section 3.1.2.3.

  1074. 1074.

    Recital 16 of Commission Regulation …/.. (CACM Regulation).

  1075. 1075.

    Article 37(6) of Directive 2009/72/EC (Third Electricity Directive).

  1076. 1076.

    Point (d) of Article 17(2) of Directive 2009/72/EC (Third Electricity Directive). Article 15(7) of Directive 2009/72/EC (Third Electricity Directive).

  1077. 1077.

    Ofgem (2009), para 3.48.

  1078. 1078.

    Rious V et al. (2012).

  1079. 1079.

    Bhattacharyya SC (2011), p. 138.

  1080. 1080.

    THEMA Consulting Group (2014), p. 19.

  1081. 1081.

    U.S. Energy Information Administration (2002), Chapter 4.

  1082. 1082.

    Article 15(8) of Directive 2012/27/EU (Energy Efficiency Directive).

  1083. 1083.

    Paragraph 2 of Annex XI to Directive 2012/2/EU (Energy Efficiency Directive).

  1084. 1084.

    Paragraph 1 of Annex XI to Directive 2012/27/EU (Energy Efficiency Directive).

  1085. 1085.

    Paragraph 3 of Annex XI to Directive 2012/27/EU (Energy Efficiency Directive): “… such as: (a) time-of-use tariffs; (b) critical peak pricing; (c) real time pricing; and (d) peak time rebates”.

  1086. 1086.

    THEMA Consulting Group (2014), pp. 7–8.

  1087. 1087.

    THEMA Consulting Group (2014), pp. 28–31.

  1088. 1088.

    Madlener R and Kaufmann M (2002), section 2.6.3.

  1089. 1089.

    Lanz M et al. (2011), section 4.4.3, p. 128. For the flexibility of generation and demand, see Lanz M et al. (2011), section 5.3.

  1090. 1090.

    Rious V et al. (2012).

  1091. 1091.

    Article 2(1) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013): “… Synchronous Area means an area covered by interconnected TSOs with a common System Frequency in a steady operational state such as the Synchronous Areas Continental Europe (CE), Great Britain (GB), Ireland (IRE) and Northern Europe (NE); …”

  1092. 1092.

    Article 2(2) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1093. 1093.

    Recital 11 of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013). See also recital 10 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1094. 1094.

    Points (c) and (d) of Article 12 of Directive 2009/72/EC (Third Electricity Directive).

  1095. 1095.

    Article 37(6) of Directive 2009/72/EC (Third Electricity Directive).

  1096. 1096.

    Article 15(7) of Directive 2009/72/EC (Third Electricity Directive).

  1097. 1097.

    Article 15(6) of Directive 2009/72/EC (Third Electricity Directive).

  1098. 1098.

    Article 37(6) of Directive 2009/72/EC (Third Electricity Directive).

  1099. 1099.

    ACER, Framework Guidelines on Electricity System Operation (2 December 2011).

  1100. 1100.

    ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1101. 1101.

    ACER, Framework Guidelines on Electricity Balancing (18 September 2012).

  1102. 1102.

    ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1103. 1103.

    ECC Clearing Conditions (0022a, 30 April 2014), section 5.2.3(1).

  1104. 1104.

    EPEX Spot Exchange Rules (28 November 2014), Article 2.23.

  1105. 1105.

    ECC Clearing Conditions (0022a, 30 April 2014), Chapter 1 Definition of Terms.

  1106. 1106.

    EPEX Spot Rules & Regulations, Appendix, Definitions (28 November 2014).

  1107. 1107.

    Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.1.4.

  1108. 1108.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 11.1.1.

  1109. 1109.

    N2EX Physical Market, General Clearing Terms, Clearing Rules (27 November 2014), section 3.2.2 and section 5.2.

  1110. 1110.

    Article 37(6) of Directive 2009/72/EC (Third Electricity Directive).

  1111. 1111.

    Rious V et al. (2012) and Finon D and Pignon V (2008).

  1112. 1112.

    See point (d) of Article 12 of Directive 2009/72/EC (Third Electricity Directive).

  1113. 1113.

    Article 16(2)(c) of Directive 2009/28/EC (RES Directive).

  1114. 1114.

    Article 16(2) of Directive 2009/28/EC (RES Directive). See also Articles 15(3) and 25(4) of Directive 2009/72/EC (Third Electricity Directive).

  1115. 1115.

    There are exceptions. For instance, Next Kraftwerke has interconnected decentralised and flexible renewable energy plants in its virtual power plant (VPP).

  1116. 1116.

    ACER, Framework Guidelines on Electricity Balancing (18 September 2012), section 1.1.

  1117. 1117.

    ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1118. 1118.

    ACER, Framework Guidelines on Electricity Balancing (18 September 2012), section 5.1.

  1119. 1119.

    ACER, Framework Guidelines on Electricity Balancing (18 September 2012), section 5.1.

  1120. 1120.

    ACER, Framework Guidelines on Electricity Balancing (18 September 2012), section 5.2.

  1121. 1121.

    § 4 StromNZV.

  1122. 1122.

    § 26 StromNZV.

  1123. 1123.

    Neveling S and Schönrock KP (2009), § 29, number 77.

  1124. 1124.

    Neveling S and Schönrock KP (2009), § 29, number 76.

  1125. 1125.

    ACER, Framework Guidelines on Electricity Balancing (18 September 2012), section 5.3.

  1126. 1126.

    Lanz M et al. (2011), section 5.4, p. 163.

  1127. 1127.

    Lanz M et al. (2011), section 5.4.1, p. 164.

  1128. 1128.

    Lund P (2006); Energinet.dk (2011); Lanz M et al. (2011), section 5.4.2, pp. 164–165.

  1129. 1129.

    Articles 25(6) and 25(5) of Directive 2009/72/EC (Third Electricity Directive). In Germany, the DSO has three main duties relating to balancing the system. Lanz M et al. (2011), section 5.4.1, pp. 163–164: “In Deutschland müssen Verteilnetzbetreiber nach den gültigen Netz-Codes (Transmission, Distribution, Grid) zu folgenden Systemdienstleistungen beitragen: Spannungshaltung … Versorgungswiederaufbau … Betriebsführung …”

  1130. 1130.

    Article 25(1) of Directive 2009/72/EC (Third Electricity Directive). See also Article 25(4).

  1131. 1131.

    Article 23 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1132. 1132.

    Bundesnetzagentur (2007), p. 3.

  1133. 1133.

    Subparagraph 1 of Article 1(4) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013). For definitions, see Article 2(1).

  1134. 1134.

    Subparagraph 2 of Article 1(4) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1135. 1135.

    Article 19 of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1136. 1136.

    Article 44(1) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013). Article 2(2): “… FCR Full Activation Time means the time period between the occurrence of the Reference Incident and the corresponding full activation of the FCR …”

  1137. 1137.

    Articles 47(1) and 44(2) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013). For definitions, see Article 2(2).

  1138. 1138.

    Article 49(1) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1139. 1139.

    Recital 15 of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1140. 1140.

    See Article 44(1) of ENTSO-E Network Code on Load-Frequency Control and Reserves (28 June 2013).

  1141. 1141.

    Article 11 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1142. 1142.

    Article 22(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1143. 1143.

    Article 22(4) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1144. 1144.

    Article 2 of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “… Central Dispatch means a scheduling and dispatch arrangement in a Responsibility Area where the TSO performs the Integrated Scheduling Process; and where the TSO issues dispatch instructions directly to the dispatchable Power Generating Facilities and Demand Facilities … Self Dispatch means a scheduling and dispatch arrangement in a Responsibility Area where the schedule of all generation units and Demand Side Response is determined by the units owners …”

  1145. 1145.

    Article 29(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1146. 1146.

    Article 27(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1147. 1147.

    Articles 27(4) and 27(5) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1148. 1148.

    Article 27(6) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1149. 1149.

    Article 27(4) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1150. 1150.

    Compare Article 26(4) of ENTSO-E Network Code on Electricity Balancing (23 December 2013): “TSOs operating Central Dispatch systems shall not be obliged to allow within the terms and conditions related to Balancing the aggregation of Demand Side Response, the aggregation of generation units, or the aggregation of Demand Side Response and generation units pursuant to paragraph 3”.

  1151. 1151.

    Article 11 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1152. 1152.

    Article 11(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1153. 1153.

    Article 2 of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “… Exchange of Balancing Energy means the process of instructing the activation of Balancing Energy bids for the delivery of Balancing Energy by a TSO in a different Responsibility Area or Scheduling Area when appropriate, than the one in which the activated Balancing Service Provider is connected …”

  1154. 1154.

    Article 2 of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “… TSO-BSP Model means a model for the Exchange of Balancing Capacity or the Exchange of Balancing Energy where the Contracting TSO has an agreement with a Balancing Service Provider in another Responsibility Area or Scheduling Area when appropriate. TSO-TSO Model means a model for the Exchange of Balancing Services exclusively by TSOs. The TSO-TSO Model is the standard model for the Exchange of Balancing Services. TSO-TSO Model for FRR and RR means a model for the Exchange of Balancing Capacity of Frequency Restoration Reserves and Replacement Reserves exclusively by TSOs …”

  1155. 1155.

    Article 14(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The European integration model for the Replacement Reserves shall consist of a single Coordinated Balancing Area. In this Coordinated Balancing Area all TSOs using Replacement Reserves shall apply a multilateral TSO-TSO model with Common Merit Order List to share and exchange all Balancing Energy bids for Replacement Reserves”.

  1156. 1156.

    Article 16(3) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The European integration model for the Frequency Restoration Reserves with manual activation shall consist of a single Coordinated Balancing Area. In this Coordinated Balancing Area all TSOs shall apply a multilateral TSO-TSO model with Common Merit Order List to share and exchange all Balancing Energy bids for Frequency Restoration Reserves with manual activation”.

  1157. 1157.

    Article 18(3) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The European integration model for the Frequency Restoration Reserves with automatic activation shall consist of a single Coordinated Balancing Area. In this Coordinated Balancing Area all TSOs shall apply a multilateral TSO-TSO model to share and exchange all Balancing Energy bids for Frequency Restoration Reserves with automatic activation respecting the principles of Common Merit Order List”.

  1158. 1158.

    Article 20(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The European integration model for the Imbalance Netting Process shall consist of a single Coordinated Balancing Area. In this Coordinated Balancing Area all TSOs shall apply a multilateral TSO-TSO model to operate the Imbalance Netting Process when economically efficient”.

  1159. 1159.

    Article 15(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The regional integration model for Frequency Restoration Reserves with manual activation shall consist of one or more Coordinated Balancing Areas. All TSOs involved in such Coordinated Balancing Areas shall apply a multilateral TSO-TSO model with Common Merit Order List to share and exchange all Balancing Energy bids for Frequency Restoration Reserves with manual activation, except unshared bids pursuant to Article 41”.

  1160. 1160.

    Article 17(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The regional integration model for the Frequency Restoration Reserves with automatic activation shall consist of one or more Coordinated Balancing Areas. All TSOs involved in such Coordinated Balancing Areas shall apply a TSO-TSO Model to exchange and optimise the activation of all Balancing Energy bids for Frequency Restoration Reserves with automatic activation, except for unshared bids pursuant to Article 41”.

  1161. 1161.

    Article 19(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The regional integration model for the Imbalance Netting Process shall consist of one or more Coordinated Balancing Areas within the Synchronous Area Continental Europe. All TSOs involved in such Coordinated Balancing Areas shall apply a TSO-TSO Model to perform the Imbalance Netting Process”.

  1162. 1162.

    Point (d) of Article 12 of Directive 2009/72/EC (Third Electricity Directive).

  1163. 1163.

    Article 15(7) of Directive 2009/72/EC (Third Electricity Directive).

  1164. 1164.

    Article 15(6) of Directive 2009/72/EC (Third Electricity Directive).

  1165. 1165.

    ACER, Framework Guidelines on Capacity Allocation and Congestion Management for Electricity (29 July 2011), section 5.

  1166. 1166.

    ACER, Framework Guidelines on Capacity Allocation and Congestion Management for Electricity (29 July 2011), section 5: “… The CACM Network Code(s) shall set out all necessary provisions for the implementation of the pan-European intraday target model supporting continuous implicit trading, with reliable pricing of intraday transmission capacity reflecting congestion (i.e. in case of scarce capacity). The method for pricing capacity and the allocation of congestion rents shall be subject to approval by the NRAs concerned. As a transitional measure, direct explicit access to the capacity will also be allowed, subject to the approval by the relevant NRAs and the conditions defined further below”.

  1167. 1167.

    Marginal costs include start-up cost, no-load cost, and incremental costs per kWh for actual generation at different levels of output. Hunt S and Shuttleworth G (1996), p. 153.

  1168. 1168.

    Madlener R and Kaufmann M (2002).

  1169. 1169.

    Nord Pool Spot Physical Markets, Trading Appendix 3, Product Specifications (launch of Elbas4), section 3.1.

  1170. 1170.

    Nord Pool Spot Physical Market, Trading Appendix 2b, Elbas Market Regulations (18 February 2013).

  1171. 1171.

    Nord Pool Spot, Internal trading in Elbas.

  1172. 1172.

    Article 70 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1173. 1173.

    Article 24(3) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1174. 1174.

    Article 24(7) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1175. 1175.

    Article 24(6) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1176. 1176.

    Article 24(4) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1177. 1177.

    Article 29 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1178. 1178.

    Article 29(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1179. 1179.

    Article 29(5) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “The list of Standard Products for Balancing Capacity and Standard Products for Balancing Energy shall define at least the following standard characteristics of a bid by a fixed value or an appropriate range: (a) Preparation Period; (b) Ramping Period; (c) Full Activation Time; (d) minimum and maximum quantity; (e) Deactivation Period; (f) minimum and maximum duration of Delivery Period; (g) Validity Period; and (h) Mode of Activation”.

  1180. 1180.

    Article 29(7) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1181. 1181.

    Article 29(8) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1182. 1182.

    Article 34(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1183. 1183.

    Article 34(4) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1184. 1184.

    Article 34(5) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1185. 1185.

    Article 34(6) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1186. 1186.

    Article 36(13) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1187. 1187.

    Article 36(7) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1188. 1188.

    Article 36(8) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1189. 1189.

    Article 36(9) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1190. 1190.

    Article 36(10) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1191. 1191.

    Article 36(12) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1192. 1192.

    Article 39(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1193. 1193.

    Article 39(2) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1194. 1194.

    Article 39(6) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1195. 1195.

    Article 39(7) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1196. 1196.

    Article 43(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “Each TSO shall have the right to reserve Cross Zonal Capacity for the Exchange of Balancing Capacity or Sharing of Reserves when socio-economic efficiency is proved in accordance with this Section using one of the following approaches: (a) co-optimisation process pursuant to Article 45; (b) market-based reservation process pursuant to Article 46; and (c) reservation based on economic efficiency analysis, pursuant to Article 47”.

  1197. 1197.

    Article 46(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1198. 1198.

    Article 47(1) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1199. 1199.

    Article 2 of ENTSO-E Network Code on Electricity Balancing (6 August 2014): “… TSO-BSP Model means a model for the Exchange of Balancing Capacity or the Exchange of Balancing Energy where the Contracting TSO has an agreement with a Balancing Service Provider in another Responsibility Area or Scheduling Area when appropriate …”

  1200. 1200.

    Article 48 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1201. 1201.

    Article 43(4) and Article 48(4) of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1202. 1202.

    Article 40 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1203. 1203.

    Article 42 of ENTSO-E Network Code on Electricity Balancing (6 August 2014).

  1204. 1204.

    § 2 StromNZV (the Electricity Network Access Ordinance).

  1205. 1205.

    Lanz M et al. (2011), section 4.4.3, pp. 129–130.

  1206. 1206.

    Point 8 of § 2 StromNZV (the Electricity Network Access Ordinance); BNetzA (the German Federal Network Agency), decision BK6-10-098 of 12 April 2011.

  1207. 1207.

    Point 10 of § 2 StromNZV; BNetzA, decision BK6-10-098 of 12 April 2011.

  1208. 1208.

    Point 6 of § 2 StromNZV; BNetzA, decision BK6-10-099 of 18 October 2011.

  1209. 1209.

    § 13(1) EnWG.

  1210. 1210.

    § 22(2) EnWG.

  1211. 1211.

    § 22(2) EnWG.

  1212. 1212.

    Lanz M et al. (2011), section 4.4.3, p. 130.

  1213. 1213.

    Transmission Code, Anhang D 3 (24 August 2007), section 3.2.

  1214. 1214.

    Transmission Code, Anhang D 3 (24 August 2007), sections 3.2.3 and 3.2.5.

  1215. 1215.

    Lanz M et al. (2011), section 4.4.3, p. 130.

  1216. 1216.

    § 6(3) StromNZV. Rahmenvertrag über die Vergabe von Aufträgen zur Erbringung der Regelenergieart Primärregelleistung, § 3.1(1).

  1217. 1217.

    § 6(3) StromNZV; Transmission Code, Anhang D 3 (24 August 2007), section 3.1 and section 3.2.2.

  1218. 1218.

    Monopolkommission (2013), numbers 334–335.

  1219. 1219.

    § 14a and 14b EnWG.

  1220. 1220.

    For definitions, see § 2 AbLaV (the Ordinance on Interruptible Load Agreements).

  1221. 1221.

    § 5(1) AbLaV.

  1222. 1222.

    § 5(2) AbLaV.

  1223. 1223.

    § 4 AbLaV.

  1224. 1224.

    Energy Market Authority, Finland (2013), p. 22.

  1225. 1225.

    NordREG (2008), section 2.2, pp. 16–18.

  1226. 1226.

    NordREG (2012), p. 28.

  1227. 1227.

    Nord Pool Spot Physical Markets, Trading Appendix 4, Clearing Rules (27 November 2014), section 3.1.1; Nord Pool Spot’s Physical Markets, General Terms, Trading Rules (1 February 2015), section 3.4.1.

  1228. 1228.

    Nord Pool Spot Physical Markets, Trading Appendix 3, Product Specifications (launch of Elbas4), section 3.1.

  1229. 1229.

    Nord Pool Spot Physical Markets, Trading Appendix 3, Product Specifications (launch of Elbas4), section 3.1.

  1230. 1230.

    Nord Pool Spot Physical Market, Trading Appendix 2b, Elbas Market Regulations (18 February 2013), section 2.2.1.

  1231. 1231.

    Nord Pool Spot Physical Market, Trading Appendix 2b, Elbas Market Regulations (18 February 2013), section 1.1.1 and section 2.3.1.

  1232. 1232.

    Nord Pool Spot Physical Market, Trading Appendix 2b, Elbas Market Regulations (18 February 2013), section 6.1 and section 6.2.

  1233. 1233.

    Energy Market Authority, Finland (2013), p. 23: “In the Nordic regulation power market all bids are collected in the joint Nordic merit order list and according to this list the production increases and decreases are carried out where they are most advantageous in the price order, however, taking into account congestions between control areas. This leads to the effective utilisation of the Nordic balancing resources”.

  1234. 1234.

    Energy Market Authority, Finland (2013), p. 23.

  1235. 1235.

    Energy Market Authority, Finland (2013), pp. 35–39.

  1236. 1236.

    Energy Market Authority, Finland (2013), pp. 49–52.

  1237. 1237.

    NordREG (2006), section 3.1, p. 10; NordREG (2012), p. 29.

  1238. 1238.

    Nord Pool Spot Physical Market, Trading Appendix 2b, Elbas Market Regulations (18 February 2013), section 2.3.5.

  1239. 1239.

    NordREG (2012), p. 29: “In Finland generation under 1 MW installed capacity is settled as consumption (against a one-price-settlement), and in Norway generation units under 3 MW are settled as consumption”.

  1240. 1240.

    NordREG (2013). See also Bjørnebye H and Alvik I (2012).

  1241. 1241.

    NordREG (2012), p. 29.

  1242. 1242.

    Nordic Balance Settlement (NBS): Common Balance & Reconciliation Settlement Design (22 December 2011), section 2.6. Consumption and sales are regarded as negative, production and purchase are regarded as positive.

  1243. 1243.

    Nordic Balance Settlement (NBS): Common Balance & Reconciliation Settlement Design (22 December 2011), section 2.7.

  1244. 1244.

    Ofgem (2009), para 3.49.

  1245. 1245.

    Nordic Balance Settlement (NBS): Common Balance & Reconciliation Settlement Design (22 December 2011), section 2.8.

  1246. 1246.

    For differences between the Nordic countries, see ibid.

  1247. 1247.

    Ibid.

  1248. 1248.

    Energy Market Authority, Finland (2013), p. 24.

  1249. 1249.

    Nordic Balance Settlement (NBS): Common Balance & Reconciliation Settlement Design (22 December 2011), Terminology: “Settlement Responsible (SR). SR has the responsibility to operate the NBS settlement”.

  1250. 1250.

    For the required legislative changes, see ibid, section 7.2.

  1251. 1251.

    Ibid, Terminology: “Balance Responsible Party (BRP). BRP is a player which has an agreement with the TSO (SR) obliging it to buy/sell balance power from/to TSO to neutralize its imbalances …”

  1252. 1252.

    Ibid, section 7.1.

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  1. Dept. of Accounting and Commercial Law, Hanken School of Economics, Vaasa, Finland

    Petri Mäntysaari

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Mäntysaari, P. (2015). Electricity Marketplaces. In: EU Electricity Trade Law. Springer, Cham. https://doi.org/10.1007/978-3-319-16513-4_4

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