On 23 September 2013 the Hungarian Parliament adopted an act amending the Electricity Act and the Natural Gas Act (the “Enforcement Act”) in connection with the implementation of Regulation (EU) No 1227/2011 of the European Parliament and of the Council of 25 October 2011 on wholesale energy market integrity and transparency (“REMIT”).
On 27 September, the governmental and ministerial decrees (the “Enforcement Decrees”) were adopted and promulgated in the official gazette.
The adoption of REMIT in 2011 was an important milestone in the development of the EU internal energy markets. For the first time, REMIT introduced a single and unified EU-wide legal framework for the regulation of market manipulation and insider trading on the EU wholesale electricity and natural gas markets. Its primary objective being to detect and deter market manipulation, REMIT also creates the legal basis for the implementation of a centralised monitoring system aimed at the regular review of the EU energy markets by the Agency for the Cooperation of Energy Regulators.
Though most provisions of REMIT have been directly applicable since it entered into force in 2011, Member States had to adopt national legislation to establish effective enforcement and sanction mechanisms relating to the obligations and prohibitions resulting from REMIT.
Our experience shows that many Hungarian market participants have yet to focus their attention on preparing for the full application of REMIT. Their relaxed attitude until now probably stems from knowing that, as long as Hungary had not adopted implementing legislation, REMIT’s otherwise strict rules could not be effectively enforced in the country.
However, following the adoption of the Enforcement Act and the Enforcement Decrees, the Hungarian implementation of REMIT has taken place and its full application has now become a reality in Hungary.
Consequently, it is high time that Hungarian market participants get prepared for actually complying with the detailed rules of REMIT. This is even more compelling as it appears from a review of the Enforcement Act and Decrees that:
- when implementing certain obligations resulting from REMIT, the Hungarian legislator went beyond what would have been strictly necessary under REMIT; and
- Hungarian market participants may face severe financial sanctions if they fail to comply with their obligations under REMIT as implemented by the Hungarian legislator: up to approximately EUR 33,000 in case of a breach of the obligation to publish inside information relating to energy wholesale products, and up to EUR 1.6 million for a breach of the prohibition of insider trading with such inside information.
When preparing for REMIT, Hungarian market participants are welladvised to take into account the specifics of the Hungarian implementation rules.