Are there exceptions to the prohibition of insider trading and the obligation to disclose inside information?
Article 3(4) REMIT stipulates that the prohibition of insider trading does not apply to some specified cases.
- Pursuant to Article 3(4)(a) REMIT, Article 3 REMIT does not apply to transactions conducted in the discharge of an obligation that has become due to acquire or dispose of wholesale energy products where that obligation results from an agreement concluded, or an order to trade placed, before the person concerned came into possession of inside information.
ACER holds that this exemption also applies under the Market Abuse Directive and particularly to transactions concerning derivatives contracts, conducted in the discharge of an obligation that has become due to acquire or dispose of wholesale energy products where that obligation results from an agreement concluded, or an order to trade placed, before the person concerned came into possession of inside information. Since the exemption also applies to orders to trade placed before the person concerned came into possession of inside information, ACER 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.
- Pursuant to Article 3(4)(b) REMIT, Article 3 REMIT does not apply to transactions entered into by electricity and natural gas producers, operators of natural gas storage facilities or operators of LNG import facilities the sole purpose of which is to cover the immediate physical loss resulting from unplanned outages, where not to do so would result in the market participant not being able to meet existing contractual obligations or where such action is undertaken in agreement with the transmission system operator(s) concerned in order to ensure safe and secure operation of the system. In such a situation, the relevant information relating to the transactions are reported to ACER and the national regulatory authority. This reporting obligation is without prejudice to the obligation set out in Article 4(1).
Concerning the exemption in Article 3(4)(b) REMIT, ACER considers that, since the exemption is limited in scope to the market participants mentioned therein, any unplanned outage under the exemption of Article 3(4)(b) REMIT may only relate to production, storage or LNG import facilities. It furthermore considers that the exemption may only be applied for unplanned outages, i.e. outages which are not ex-ante known by the primary owner of the data, and that any physical loss needs to be caused immediately and solely by that unplanned outage. The aforementioned market participants can only use this exemption to enter into transactions to cover the immediate physical loss. Any further trading that goes beyond covering the immediate physical loss does not fall under the scope of this exemption.
The exemption in Article 3(4)(b) REMIT may only be applied by the aforementioned market participants for transactions as described above in the following two instances:
- where not to do so would result in the market participant not being able to meet existing contractual obligations; or
- where such action is undertaken in agreement with the transmission system operator(s) concerned in order to ensure safe and secure operation of the system.
Regarding the first instance, ACER considers that the contractual obligations referred to must exist ex-ante of the immediate physical loss resulting from unplanned outages. The existing contractual obligations must relate to the relevant period of the unplanned outage.
ACER considers a market participant “not being able” to meet such existing contractual obligations only if the market participant has no other own assets available to cover the physical loss. The application of exemption in Article 3(4)(b) REMIT cannot coincide with the application of Article 4(2) REMIT concerning delayed disclosure of inside information, as Article 4(2) REMIT requires that the market participant does not make decisions based upon the relevant inside information.
As regards the second instance, ACER considers that the criterion “to ensure the safe and secure operation of the system” may apply in cases of Article 3(4)(c) REMIT.
If a market participant applies the exemption in Article 3(4)(b), the relevant information relating to the transactions must be reported to ACER and E-Control. In order to assist those market participants in reporting information, ACER has made an electronic notification platform available on its website. Should this notification platform be unavailable, it is also possible to fill in and submit the form that can be found in the section disclosure forms under Reporting information pursuant to Article 3(4)(b) REMIT by sending it to remit@e-control.at.
- Pursuant to Article 3(4)(c) REMIT, Article 3 REMIT does not apply to market participants acting under national emergency rules, where national authorities have intervened in order to secure the supply of electricity or natural gas and market mechanisms have been suspended in a member state or parts thereof. In this case the authority competent for emergency planning must ensure publication in accordance with Article 4.
With regard to the exemption of Article 3(4)(c) REMIT, ACER considers that it will normally coincide with the exemption of Article 4(2) REMIT and that in such case the authority competent for emergency planning must ensure publication in accordance with Article 4(1) REMIT. If a market participant is required by national emergency rules to enter into transactions, any such transactions entered into whilst in possession of inside information will not be in breach of Article 3 REMIT.
- Pursuant to Article 4(2) REMIT, a market participant may under its own responsibility exceptionally delay the public disclosure of inside information so as not to prejudice its legitimate interests provided that such omission is not likely to mislead the public and provided that the market participant is able to ensure the confidentiality of that information and does not make decisions relating to trading in wholesale energy products based upon that information. In such a situation the market participant must without delay provide that information, together with a justification for the delay of the public disclosure, to ACER and the relevant national regulatory authority having regard to Article 8(5).
The decision to exceptionally delay the public disclosure of inside information in accordance with Article 4(2) REMIT is for market participants to make. It is not the role of ACER or E-Control to pre-approve the application of Article 4(2) REMIT to a specific set of circumstances. In any instance where a market participant chooses to delay disclosure, it must ensure that such a delay is not likely to mislead the public, that it does not make trading decisions on that information and that the information remains confidential. As Article 4(2) REMIT requires that the market participant does not make trading decisions based on that inside information, ACER underlines that the application of Article 4(2) REMIT cannot coincide with the application of Article 3(4)(b) REMIT. Whether a market participant rightly or falsely applied Article 4(2) REMIT can only be determined ex-post. As soon as the legitimate interests cease to exist, the market participant must disclose the inside information in accordance with Article 4(1) REMIT.
To assist market participants to notify ACER and E-Control about a delay of the public disclosure of inside information and its reason without delay, ACER provides an electronic notification platform to market participants. Should this notification platform be unavailable, it is also possible to fill in and submit the form that can be found in the section disclosure forms under Reporting information pursuant to Article 4(2) REMIT by sending it to remit@e-control.at.