CEER Publishes Final Advice on the Introduction of a Europe-Wide Energy Wholesale Trading Passport

The Council of European Energy Regulators (CEER) has presented a paper that proposes to introduce a Europe-wide Energy Wholesale Trading Passport, which sets uniform standards and replaces national regulatory access regimes respectively introduces them for the first time in some EU countries. This would create a level playing field and reduce bureaucracy, in particular for trading companies active in more than one country, CREER says.

At the request of the European Commission CREER has been engaged since 2009 in analysing the regulatory access to wholesale energy trading. CREER found a patchwork of individual national licensing regimes and differing access requirements to wholesale energy markets. This constitutes administrative burdens and barriers for competition in wholesale energy markets, especially for trading companies that want to be active in several countries, CREER says. On the other hand there are also European countries without any access requirements at all. Besides the Markets in Financial Instruments Directive (MiFID) requests another set of obligations to be fulfilled.

Based on these findings, CEER recommends certain requirements and administrative standards for a wholesale energy market access regime:

  • All trading companies active on the market should be known, including some basic information such as the name of the company, field of activity and the ultimate ownership;
  • Persons effectively running the trading company (management) should be obliged to provide certain information, for example their criminal record;
  • If there is a fee for obtaining a trading license this should be cost-based;
  • The application procedure and its maximum duration should be Europe-wide standardized;
  • Trading companies should demonstrate their technical, financial and organisational capacity to fulfil all energy regulatory guidelines;
  • A branch office, collateral amounts, an economic success check or any provisions relating to security of supply should not be required.

CEER believes that the best way to implement these requirements would be to introduce a Europe-wide Energy Wholesale Trading Passport regulating access to wholesale energy trading once the Agency for the Cooperation of Energy Regulators (ACER) is fully ready to fulfill its tasks regarding market monitoring as described in the Regulation on Energy Market Integrity and Transparency (REMIT). Companies that already hold a MiFID license shall not be required to apply for the Energy Wholesale Trading Passport. Such a trading passport should be issued at Member State level by the national regulatory authorities, CREER proposes. Each trading company would need to apply for such a passport only once and could then use this passport on all European wholesale energy markets. In parallel, all national regulatory access regimes to wholesale energy trading would be abolished. When issuing the passport, all national regulatory authorities would be limited to the general requirements outlined in detail in the CREER paper (Chapter 3). In order to get a comprehensive overview of all market participants, national regulatory authorities would inform ACER of all applications for a trading passport.

Even though the REMIT Directive foresees the introduction of a registration for all trading companies and the establishment of a European register, CEER believes there is a need for a Europe-wide energy wholesale trading passport, as the MiFID registration does not substitute the different licensing obligations in Europe and will not lead to a reduction of the bureaucratic burdens for trading companies.

Source: CEER

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