David Bernal of Allegro writes about the EU Wholesale Energy Market Integrity and Transparency regime and how firms are complying.
The enabling legislation for the EU’s Wholesale Energy Market Integrity and Transparency (REMIT) regime, which is designed to prevent wholesale market manipulation and insider trading, took effect on 7th January. Yet, many energy market participants are at risk of non-compliance as they find themselves playing catch up, struggling to understand REMIT’s reporting guidelines and how to implement them. Needless to say, that’s a risky position to be in.
How did it come to this? In the aftermath of the global financial crisis, the G20 agreed a series of reforms to improve transparency in OTC derivative markets. Dodd-Frank marked the first major salvo to boost accountability in energy trading, followed by REMIT and its sister regime EMIR in the European Union. The rollout of both sets of rules has been marked by shifting deadlines and a worrying lack of detail. Add to that the coming launch of MiFID II in 2017, which will pile yet another layer of regulatory risk onto the compliance burden for energy trading.
Perhaps understandably, many companies are still waiting for regulators to shed some light on how all these different regimes will overlap before deciding how to act but this puts them at risk of delays in compliance and potentially steep fines.
What options do trading firms have?
Despite the urgency for REMIT compliance, there are viable alternatives for what companies can do in the short-term to get beyond tick-box compliance. It is essential that a robust method is in place for reporting, Clearing and mitigating risk.
Additionally, in cases when regulatory regimes intersect, specific processes need to be implemented. It would be impossible to cope with electronic reporting and data storage requirements manually. Managing by spreadsheet is therefore not an option.
Outsourcing may work, but it comes with the added cost of an ongoing third-party contract to manage. Furthermore, a third party provider will most likely not be responsible for paying fines should there be any mistakes or delays in compliance. Even if you could negotiate a contract that held them financially liable, what would an infraction mean to your brand reputation? The collateral cost of cleaning up a public relations nightmare could be devastating.
That leaves accepting higher prices by abandoning a hedging strategy altogether – not a good thing for the bottom line – or automating the process. From my perspective the best business decision rests with Automation.
Investing in a robust CTRM system would make the most business sense. At minimum, it would execute trades efficiently and guarantee trade compliance. Improved decision-making and market intelligence would be added bonuses.
Energy traders need to address REMIT compliance today. Given the evolving standards and timelines that define today's regulatory environment, letting automated systems do the heavy lifting offers the best and fastest solution.
-- David Bernal is Senior Solutions Manager for Allegro Development Corporation (www.allegrodev.com)
ENDS
The enabling legislation for the EU’s Wholesale Energy Market Integrity and Transparency (REMIT) regime, which is designed to prevent wholesale market manipulation and insider trading, took effect on 7th January. Yet, many energy market participants are at risk of non-compliance as they find themselves playing catch up, struggling to understand REMIT’s reporting guidelines and how to implement them. Needless to say, that’s a risky position to be in.
How did it come to this? In the aftermath of the global financial crisis, the G20 agreed a series of reforms to improve transparency in OTC derivative markets. Dodd-Frank marked the first major salvo to boost accountability in energy trading, followed by REMIT and its sister regime EMIR in the European Union. The rollout of both sets of rules has been marked by shifting deadlines and a worrying lack of detail. Add to that the coming launch of MiFID II in 2017, which will pile yet another layer of regulatory risk onto the compliance burden for energy trading.
Perhaps understandably, many companies are still waiting for regulators to shed some light on how all these different regimes will overlap before deciding how to act but this puts them at risk of delays in compliance and potentially steep fines.
What options do trading firms have?
Despite the urgency for REMIT compliance, there are viable alternatives for what companies can do in the short-term to get beyond tick-box compliance. It is essential that a robust method is in place for reporting, Clearing and mitigating risk.
Additionally, in cases when regulatory regimes intersect, specific processes need to be implemented. It would be impossible to cope with electronic reporting and data storage requirements manually. Managing by spreadsheet is therefore not an option.
Outsourcing may work, but it comes with the added cost of an ongoing third-party contract to manage. Furthermore, a third party provider will most likely not be responsible for paying fines should there be any mistakes or delays in compliance. Even if you could negotiate a contract that held them financially liable, what would an infraction mean to your brand reputation? The collateral cost of cleaning up a public relations nightmare could be devastating.
That leaves accepting higher prices by abandoning a hedging strategy altogether – not a good thing for the bottom line – or automating the process. From my perspective the best business decision rests with Automation.
Investing in a robust CTRM system would make the most business sense. At minimum, it would execute trades efficiently and guarantee trade compliance. Improved decision-making and market intelligence would be added bonuses.
Energy traders need to address REMIT compliance today. Given the evolving standards and timelines that define today's regulatory environment, letting automated systems do the heavy lifting offers the best and fastest solution.
-- David Bernal is Senior Solutions Manager for Allegro Development Corporation (www.allegrodev.com)
FCA Targets Financial Promotions: 85% of Interventions Directed at Lending and Investments
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
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#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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