Changes to Processes for MiFIR Pre-Trade Transparency Requirements

Changes to Processes for MiFIR Pre-Trade Transparency Requirements

Dear Trading Participant,

EEX will adapt its trade registration procedures as of 1 January 2020 in order to ensure compliance with pre-trade transparency requirements for pre-arranged transactions (also commonly known as ‘block trades ’or ‘OTC-cleared transactions’), as laid down in Art. 8 of the Markets in Financial Instruments Regulation (MiFIR)1, Commission Delegated Regulation 2017/5832 and the ESMA Q&A on MiFID II and MiFIR transparency topics3.

The date is in line with the recent ESMA Supervisory Briefing4 providing a timetable for the implementation of pre-trade transparency requirements in commodity derivatives applicable to all commodity derivative exchanges in Europe.

The EEX solution will minimize the impact on the existing trade registration process on member side, while at the same time meeting the regulatory requirement to provide transparency for pre-arranged transactions that can be acted upon by third parties before a trade is executed.

There will be no changes to transactions executed in the central limit orderbook of EEX.

Envisaged changes to the existing EEX trade registration process

For every pre-arranged transaction that does not benefit from a waiver (“Large In Scale” – for larger trades above specified thresholds – and “Illiquid Instruments”) or an exemption, EEX will ensure pre-trade transparency by redirecting automatically the respective trading interests of both counterparties to a new transparency platform, where it will trigger a volume auction at the price of the pre-arranged transaction. Consequently, there could be concurrent auctions for transactions in the same product at different price levels, allowing trading participants to find the best price. Each auction shall run for 15 seconds. There is no further action required from counterparties of the pre-arranged transaction. However trading participants have the option to engage with such auctions via a separate Graphical User Interface (GUI), where they can register additional trading interest for any given volume auction.

Scope / affected products

Based on the transparency calculations published by ESMA5, the following EEX products and instruments are generally subject to pre-trade transparency for pre-arranged transactions:

EEX product codeProductMaturites
F1B*Phelix DE/AT/LU Power Baseall months, first 8 quarters, first 2 years
FBB*Nordic Power Baseall weeks, all months, all quarters, first 2 years
FEB*Spanish Power Baseall months, first 4 quarters, first year
F7*French Power Baseall days, all weekends, all weeks, all months, first 4 quarters, first year
FD*Italian Power Baseall days, all weekends, all weeks, all months, first 4 quarters
G9*NBP Gasall months, all quarters, all seasons
G3*TTF Gasall months, all quarters, all seasons and the first 3 years
FEUAEUA future marketall expiries
OEUAEuropean-Carbon-Optionsall expiries
SEMEEUA secondary spot marketall expiries

Please note: The list of products already includes gas derivatives currently listed at Powernext since EEX intends to merge Powernext products into EEX on 1 January 2020. Further information can be found in the EEX Customer Information dated September 3, 2019.

Pre-arranged transactions in products listed above exceeding specified thresholds, described as notional value or tons of carbon dioxide equivalent and published on the EEX website under: https://www.eex.com/eex-ptt-parameters-2020-data.pdf, will not be subject to pre-trade transparency and will be processed without any changes to today’s deal flow.

Pre-arranged transactions in products listed above (except EUA secondary spot market) that are marked as ‘hedging transaction ’by at least one counterpart of the transaction will not be subject to pre-trade transparency and will be processed without any changes to today’s deal flow.

The EEX’s solution will support transactions that are pre-arranged by brokers and submitted to EEX via the standard Straight-Through-Processes (STP) as well as transactions that are submitted to EEX using the ‘trading on-behalf ’service.

Access to the Trade Registration Transparency Platform

Trading participants who intend to interact with the TR Transparency platform are required to submit the relevant access request form, to be found on the EEX website under: https://www.eex.com/en/access/admission-neu/admission-forms to the EEX Member Readiness Team. An additional technical access fee of 1,800 €/year per individual user applies for that kind of access.

Exchange rulebook

EEX will publish relevant changes to the EEX rulebook to reflect the regulatory changes by 13th December 2019 latest.

Questions & Answers

A document outlining a more detailed background of the regulatory requirements as well as the details of the EEX solution has been made available on the EEX website under: https://www.eex.com/en/regulatory-reporting-services/mifid2-mifir/mifid2mifir-outline/pre-trade-transparency or https://www.eex.com/20191202-ptt-qa-v1-0-data.pdf.

Should you have any additional questions, please do not hesitate to contact us.

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