REMIT Insider Trading Investigation - Italian Power Market

This week ARERA, the Italian energy market regulator, announced another REMIT investigation (click here) following on from this investigation announced on 20 July. This case, which is also still in the investigation stage, relates to a breach of Article 4 of REMIT which requires the “effective and timely” disclosure of inside information. The firm in question is Enel Produzione (Enel), and the activity relates to a pumped storage asset, further details of which have been redacted from ARERA’s notice. 

The salient aspects of the case are briefly summarised as follows:

• ARERA quote the ACER Guidelines which specify that the publication of inside information must take place in a way that allows the widest possible dissemination to the public while guaranteeing easy and equal access to all users and therefore such disclosures should be made using a centralised platform (i..e. Inside Information Platform) and the simultaneous publication on the market participant's website or via social media can be used as an additional means of publication, but must ensure that the published information is identical;
• ARERA also notes that in order to effectively publish inside information certain minimum quality requirements must be met and publication made in the form of an Urgent Market Message (UMM) must have a certain minimum set of information included;
• ARERA also notes the timeliness of the publication of inside information - ACER requires that it is published as soon as possible, normally within one hour of the event unless otherwise specified, and publication must occur before engaging in any trading activity in a related market;
• In July 2022, ACER notified ARERA of a suspected violation of Article 4 involving the ineffective and untimely reporting of inside information by Enel both on a IIP managed by GME, the exchange operator, and on Enel’s website relating to a pumped storage asset (MW capacity and location of the asset have been redacted);
• Through October and November 2022, ARERA requested information from Enel and an audit was conducted with corroborating information also provided by the System Operator (SO) relating to station availability and output;
• On redacted dates, Enel made a late publication relating to an asset outage. An error evidently prevented the publication from successfully posting on the IIP, and Enel did not immediately re-send the failed message but rather waited one day from the start of the outage before doing so by which stage the outage event had already ended. Enel did not communicate or justify the delay to the public;
• In ARERA’s view, Enel breached Aricle 4 of REMIT as Enel did not publish inside information effectively in that:

1. They did not ensure that the inside information published on its website was identical to that published on GME IIP as required by Chapter 4.2.1 of the ACER Guidelines;
2. Regarding the publication of Inside Information on the IIP, Enel did not comply with the minimum accuracy requirements specified in the ACER Guidelines in Chapter 4.2.2. Specifically:

- They published information on the IIP that had already been sent;

- They published information relating to a period of time already partially covered by previous publications - this hindered the reconstruction of the events published on the IIP;

- They did not publish the privileged information in a complete, accurate and correct manner, leading to inconsistencies, throughout the period between the information published on its website, on the IIP and the information transmitted to the SO relating to available capacity.

• In March 2023 Enel announced that it had completed the work on a disclosure portal aimed at achieving full compliance with the requirements laid out by ACER in the REMIT Guidelines for the effective publication of inside information. This development would allow for identical information to be published on their website and IIP.
• Considering the above, ARERA determined that Enel has breached Article 4 of REMIT and have initiated proceedings to seek sanctions for the infringement.

 RegTrail Insights

Superficially, this case seems to be a reasonably straightforward breach of Article 4 under REMIT although this might test whether ACER Guidance can be challenged given that it is not legally binding and ARERA’s case makes direct reference to provisions within the guidance.

Regardless, this serves as a useful reminder for firms with UMM disclosure obligations to ensure that their systems and processes remain effective. Time decay can undermine even the most well-established compliance processes if these are not actively maintained and regularly tested to validate robustness. It is also noteworthy that this case was initially triggered through ACER’s monitoring efforts.