London, 14 December 2010

The European Federation of Energy Traders ( EFET) welcomes the draft proposal for a Regulation on Energy Market Integrity and Transparency (REMIT) of the European Commission. This proposal aims to put in place a new EU regime for regulatory supervision of physically traded power and gas. It is an important first step towards ensuring a comprehensive market integrity framework for wholesale transactions, regardless of where in Europe they take place.

1 The European Federation of Energy Traders (EFET) promotes and facilitates European energy trading in open, transparent and liquid wholesale markets, unhindered by national borders or other undue obstacles. EFET currently represents more than 90 energy trading companies, active in over 27 European countries. For more information: www.efet.org.

EFET has played a key role in promoting transparency in wholesale commodity markets and has supported the European Commission as it has developed its REMIT proposals. We welcome the move to put in place a harmonised European regime, whereby regulators may receive necessary information about transactions. Their access to such information should ensure that they can effectively monitor markets.

The future regime must, however, be carefully designed, so as not to harm the market, nor hinder its development. It will be important tightly to define (in implementing measures) what constitutes insider information and what may amount to market manipulation, in a manner suitable for the physical and commercial realities of the power and gas sectors throughout Europe. It is crucial that market integrity rules recognise the market structures and underlying physical characteristics of the commodities concerned.

EFET also urges the European Commission to clarify the powers and responsibilities of competent energy and financial regulators, in order to avoid duplications of function, constrain appropriately powers of investigation, and guarantee proportionate sanctions subject to a right of appeal. Regarding delegated acts the Commission will use, we underline the need for a transparent elaboration process, in close consultation with market participants.

REMIT implementation should be properly coordinated with financial market supervision and controls. It must not duplicate other legislation dealing with supervision of commodity markets – particularly transactions in derivatives (see section 2 below) and carbon emission allowances.

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