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Knowing what is in your REMIT

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As mentioned in this blog recently and in this ICIS story today, the implementing acts for REMIT are likely to come in November. It is possible they might come sooner. In the article linked to above, some market participants complain about the six-month timeframe companies will have to digest the implementing acts before they have to start reporting power and gas trades.

This is true, but draft acts have already been released, and it is important that companies understand what is already known, and likely to remain in the final acts. One area is what will need to be reported by companies six months after the acts are published by the European Commission, or phase one of trade reporting. A market consultant told me a misconception exists around venues and the reporting of trades.

The latest draft suggests trading venues can be obliged to report trades, if a company makes such a request (probably at a cost). And because it will 12 months after the acts are published before the likes of bilateral deals must be reported, phase 2, companies can rely on a trading venue to get the initial reporting necessary done. The problem with this is brokers, even for onscreen deals, will not know the full life-cycle of a deal, whether it is delivered or cancelled, for example. The full life of a deal must be reported. So relying on your broker to report trades could lead to problems, if the company has not set up how it will tackle the life of a trade later on.

If anything can be taken from EMIR, it is a certain amount learning while doing will probably happen with trade reporting for REMIT. Even seven months after reporting began with EMIR, many problems still exist, particularly the matching of trades. ACER will no doubt learn from ESMA, but the process is unlikely to be plain sailing.