How is the role of exchanges responding to regulatory requirements?

January 10, 2018

 

 

Peter Krusaa, Sr Lead Regulatory Advisor - Regulatory Affairs, Ørsted (formerly DONG Energy)- one of the ETRC veterans, joins us on a discussion around the role of exchanges in the context of regulatory requirements. Here are his takes.

Peter will be speaking on Day 1, 6th March 2018 at 16.30, on:

The changing role of exchanges

Where do exchanges fit in the new trading landscape?

Regulatory constraints for exchanges

Organising the reporting of positions

Guiding companies through trade surveillance

 

 

1: What is your perception of the role of exchanges when it comes to complying with trade surveillance?

"​​Trading venues are [...] playing an increasingly
important role in the regulatory landscape."

 

Exchanges have already for a long time played an important role when it comes to trade surveillance. What is new is that all market participants have been obliged to review and, probably in some cases, upgrade their trade surveillance. Besides that trading venues are for other reasons – such as the implementation of position limits – playing an increasingly important role in the regulatory landscape.

 

2: Have you seen in recent years a shift towards more exchange-traded contracts? A shift towards more cleared trades?

​"We have seen a shift towards exchange-traded contracts and, thereby, also more cleared trades."

 

Generally, we have seen a shift towards exchange-traded contracts and, thereby, also more cleared trades. This is not least the case for power contracts. However, we have also in the Nordic power market seen what could be the impact of the ban of use of bank guarantees. After this ban came into force significant termination of membership of the Nordic power exchange has taken place together with cleared volumes in Nordic power contracts have decreased compared to the same period before the ban came into force.

 

3: What are the main obstacles in the way to a successful position reporting?

 

The key driver is to get a workable setup, i.e. not too burdensome to implement and to run subsequently. In this context, it seems that there have been a good cooperation between market participants and trading venues, e.g. in terms of deciding on at common format for the reporting to be made.

 

4: Commodities regulatory landscape is continuously evolving. How can a company make sure to remain compliant over time?

 

"You have to have a general awareness
of what to do and where to be careful."

 

The problem right now when it comes to compliance is not only the implementation of the specific sets of rules. The problem – or challenge – is that all the regulations coming up add to the complexity. Many firms have in this context succeeded in creating or lifting a ‘compliance culture’ together with more streamlined compliance functions. The job is not done by writing more and more compliance policies. You have to have a general awareness of what to do and where to be careful.

 

 

Related sessions from ETRC 2018:

 

The changing role of exchanges

  • Where do exchanges fit in the new trading landscape?

  • Regulatory constraints for exchanges

  • Organising the reporting of positions

  • Guiding companies through trade surveillance

    Peter Krusaa, Senior Lead Regulatory Advisor - Regulatory Affairs, Ørsted (formerly DONG Energy)

 

Setting up an efficient compliance function in energy trading

  • Structuring your compliance department

  • Outsourcing

    o What does the legislation say?
    o Advantages and drawbacks
    o What do you still need to have in-house?

    Federico Piccaluga, General Counsel, DufEnergy Trading SA

 

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