The consequence of a shift from bank regulation to trading regulation

January 5, 2017

 

 

 

It’s no secret that regulation in the energy trading sphere is more robust than ever. The question is however, is there such thing as regulation which is “too aggressive”? Are they any repercussions?

 

Peter Krusaa, Senior Lead Regulatory Advisor, Energy Markets, will be presenting at ETRC on how the modern regulatory suite fits into the wider picture in Europe. Ahead of this, we got the chance to ask him a few exciting questions:

 

Please tell us about your role at DONG Energy briefly along with what your current priorities are.

 

I mainly deal with regulation related to energy trading. Therefore a key part of my work is focusing on financial regulations with an impact on energy companies, e.g. the secondary legislations to MIFID II such as the RTSs on the exemption for ancillary activities and position limit, and the coming EMIR review.

 

What do you see as causing the most impact in the regulatory space right now? MIFID II with January 2018 approaching?

 

What is causing the most impact is without doubt if the energy industry ends up needing a MIFID license or at least a significant part of the industry ends up needing a license as this will also influence none captured companies. Furthermore, it will be interesting to see if the regime on position limits may end up “drying up” liquidity in some products. However, the hedging extension should prevent obstacles for hedging your on-going exposures. Also, it should be interesting to see how the rules will be interpreted. In other words, how the third level guidance and Q&As will be in line with the reality so to speak or do we face a clash.

“…the benefit from treating commodities like financial transactions is not always easy to see. Do we really need all this regulation to feel safe as a society?”

Generally speaking, it is commonly held that the energy industry is moving more and more towards the financial one – do you agree?

 

It may just be a semantic difference but I do not see the energy industry moving closer to the financial one. However, we have seen the rules on the financial sector changing from more bank related regulations into trading regulations. Accordingly, what I see happening is that more and more regulations are covering both the financial sector and the energy industry. This implies some challenges for the energy industry as ‘re-use’ of financial legislation on commodities does not always fit the purpose nor being appropriate.

 

You will be speaking about how the modern regulatory suite fits into the broader picture in Europe – can you give us a preview of what you will be bringing to the discussion?

 

First of all, I will underline the consequences of the shift from bank regulation to trading regulation.​

“… or are we only adding to the complexity and thereby the cost level of an industry influencing many parts of the society, including the competitiveness of Europe in a world where every little advantage or dis-advantage counts.”

Both in practice and lobby-wise this shift is quite fundamental. Lobby-wise it is difficult to say that we shall have special treatment as we obviously are trading. On the other hand, it is also clear that the benefit from treating commodities like financial transactions is not always easy to see. Do we really need all this regulation to feel safe as a society? … or are we only adding to the complexity and thereby the cost level of an industry influencing many parts of the society, including the competitiveness of Europe in a world where every little advantage or dis-advantage counts.

 

Further, the frequency of the regulatory initiatives has certainly stretched the resources in terms of compliance. I guess the whole industry is familiar with heavy implementation projects when it comes to new regulation.

 

See more:

 

"MIFID II - Overwhelming regulatory wave that would lead to a domino effect of changes in the energy market"

An Academic’s point of view on regulations of the energy market

Is compliance harmonisation a near-future reality or a utopia?

 

 

 

Peter R. G. Krusaa. Senior Lead Regulatory Advisor, Regulatory Affairs, Energy Markets.

 

Having a background as master of Business Administration & Commercial Law Peter Krusaa began his carrier as civil servant dealing with the liberalisation of the telecom industry. Later Peter shifted to represent the industry in relation to influence the regulatory framework.

 

After more than a decade within the telecom sector Peter change to the energy sector as Regulatory Advisor at DONG Energy. Initially focus has been European energy sector specific regulation (3rd Energy Package and REMIT). However, over the past six years more and more time has been used on financial regulation with an impact on the energy sector, e.g. MiFID, EMIR and MAR.

 

During his carrier Peter has been member of several working groups, task forces and committees within European Federation of Energy Traders (EFET), Eurelectric, Eurogas and International Association of Oil & Gas Producers (IOGP) as well as having been appointed industry expert towards regulatory authorities at national, Nordic, and European level.

 

 

 

Please reload

Recent Posts
Please reload

Archive
Please reload

Follow Us
  • LinkedIn Social Icon
  • Twitter Basic Square
  • Google+ Basic Square
  • YouTube Social  Icon

Follow Us

Commodities People
Level 39
One Canada Square
Canary Wharf
London E14 5AB

+44 20 7111 1615

  • Internet noir
  • LinkedIn - Black Circle
  • Twitter - Black Circle

© 2019 Commodities People