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2014 – The year compliance hits the fan for the energy trading industry

After several years of talking, negotiating, analysis and the introduction of a few new regulations, 2014 sees the arrival of some major new rule sets that will need to be met in the world of energy trading. In particular this year sees the introduction of two sets of trade reporting, under EMIR and REMIT, with EMIR Trade Reporting to go “live” on Feb 12th, and REMIT trade reporting due in Q4. We also are will see the start of the REMIT rules themselves, currently slated for Q2.

The start of trade reporting hammers home the message that these rules are “real”. With only weeks until go live, there is a great deal of work to do for many companies. Even so, some details still must be grasped, such as the UTI issue, backloading and the handling and reporting of exchange traded derivatives.

It is unlikely that there will be full clarity by go live, but this is not a reason to wait. Market participants are expected to do their best to comply, and any non-clarity will be addressed afterwards.

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On top of that, rules already in force, such as portfolio compression, reconciliation and timely confirmations will kick in with a vengeance this year, adding to the high workload.

The next weeks are likely to be filled with EMIR trade reporting activity, no doubt for several weeks after the 12th February. Once that starts to settle down a bit, it will become apparent which changes will need to be made for a more “permanent” solution.

At the same time, details about REMIT reporting will hopefully become much clearer in the next few weeks, allowing the focus to move to implementation of that set of data mid-year and leading up to Q4.

In the second half of the year we can expect more of a focus on clearing, which will affect the energy industry whether it is mandatory or not. And we will also know some more about MiFID II, which is currently struggling through the European approval process. These will no doubt set the scene for the years ahead.

So, prepare for a busy rollercoaster of a year, full of milestones, real deliverables and confusing requirements. Being knowledgeable, flexible and prepared will be key.