DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
7th September
2016
Discussion Draft of the
EirGrid / SONI Exchange
Rules Titles 1-4
Discussion Draft
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Introduction
Context
This document has been prepared as a discussion draft of the governance and administrative
sections of the rules (the “Exchange Rules”) to be developed in relation to the governance,
administration and operation of the day-ahead and intraday markets facilitated by EirGrid and SONI
in their role as a designated NEMO for the Single Electricity Market (SEM) on the island of Ireland.
EirGrid and SONI have been designated in this role under Article 4 of the European Commission
Regulation 2015/1222 of 24 July 2015, establishing a guideline on capacity allocation and congestion
management (CACM Regulation), and as Exchange Operator of the intraday market.
The form and content of the Exchange Rules will be dictated in part by the EU CACM Regulation, and
informed by other exchange rules already in force in the EU, and therefore will be familiar to
participants in interconnected electricity markets. Day-ahead market coupling will be achieved
through the PCR Solution. The Exchange will therefore enter into an extended cooperation for
Multiregional Price Coupling (MRC) by adhering to the Day-Ahead Operating Agreement (DAOA). The
obligations placed on the Exchange through the DAOA will dictate the form and content of much of
these rules, in particular those pertaining to the day-ahead market.
The European Power Exchange (EPEX) Spot Exchange Rules V.002, 18 March 2016 has been chosen
as a starting point for developing the Exchange Rules while day-ahead and intraday market rules
from other EU jurisdictions are also being reviewed by the drafting team as part of this process.
The draft Exchange Rules are based on the EPEX rules but rather than being contained in a series of
separate parts (as is the case with the EPEX rules), it is proposed that these will be consolidated into
a single document, with a number of Annexes. While there are common areas between the design
of the ex-ante markets for the SEM and those set out in the EPEX Rules and those of other EU
jurisdictions, they have been customised for the local market arrangements and there are
differences in governance structures, market scope, contracts and membership.
Thus, while it is proposed to base our Exchange Rules on existing models from other EU jurisdictions,
there will need to be careful consideration as to how the concepts set out in those rules are best
treated in the context of the SEM, and they will need to be modified accordingly to ensure they are
fit for purpose.
This document represents the first four “Titles” in the EPEX Rules, which cover the governance
framework, modifications process, admission and membership, the code of conduct, audits and the
products, contracts and market segments. It largely follows the sequence and framework of the
EPEX Rules in presenting a preliminary view of what the Exchange Rules may look like in these areas,
but where further analysis is required and decisions have yet to be made regarding implementation,
there are placeholders and/or discussion of the objectives and matters being considered for those
sections.
Definitions
Nomenclature and branding of the EirGrid and SONI NEMO and its ex-ante markets have yet to be
determined. Until this is resolved, this document refers to the SEM’s ex-ante markets, the market
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
operator and the participants as the “Exchange”, “Exchange Operator” and “Exchange Members”,
respectively.
Similarly, the rules described in this document are referred to, for now, as the Exchange Rules. These
Exchange Rules will apply only to the following markets:
Day-ahead
Market
DAM
means the electricity market as part of the SEM arrangements which is a financially
firm and physically-binding forward electricity market, whose Delivery Day is from
00:00 Central European Time (CET) to the following 00:00 CET (which is 23:00
local time)
Intraday
Auction
IDA
means the electricity market as part of the SEM arrangements which occurs after
the Day Ahead Market and applies to I-SEM and GB only, which is a financially firm
and physically-binding forward electricity market for a specific Trading Day or
portion of a Trading Day
Intraday
Continuous
Markets
IDC
means the continuous trading arrangements between Participants registered in the
SEM in the intraday timeframe opening after DAM gate closure (D-1 12:45 CET)
and closing one hour prior to the relevant Imbalance Settlement Period.
Source: I-SEM Technical Specification Glossary V1.0
Exchange refers only to these day-ahead and intraday segments of the broader Irish and Northern
Irish Single Electricity Market (that encompasses balancing and capacity markets).
Exchange Member applies only to legal entities that enter a Membership Agreement with the
EirGrid and SONI for the day-ahead and intraday markets.
Yellow indicates cross-references that need to be updated as drafting progresses.
In accordance with the currently proposed revised Trading and Settlement Code, any NEMO
providing ex-ante market services in the SEM will be required to interact with that Code as follows:
Source: Draft Transfer & Settlement Code, Chapter B. Legal & Governance
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Proposed Table of Contents
The structure of this document has generally followed that in the EPEX Rules which are comprised of
a number of parts or “Titles”, each of which is made up of a number of Chapters. There are then a
number of Annexes.
This document covers Titles 1-4 as follows:
Title 1 General Principles of Organisation and Bodies
Chapter 1
The Exchange Operator’s Market Organisation and its Market Segments
Chapter 2
Legal and Regulatory Framework
Chapter 3
Market Organisational Bodies of the Exchange
Title 2 Admission
Chapter 1
Exchange Membership
Chapter 2
Admission of Exchange Members
Chapter 3
Requirements for the Orderly Settlement of Transactions
Chapter 4
Requirements for Technical Access
Chapter 5
Admission of Traders
Chapter 6
Membership Procedures
Title 3 Code of Conduct and Audits
Title 4 Contracts and Market Segments
Chapter 1
Contracts and Products
Chapter 2
Market Areas
Chapter 3
Market Segments
Chapter 4
Electronic platform of trading
Subsequent Titles in the Exchange Rules to be developed may be as follows:
Title 5
Trading on the Day-Ahead Market Segment
Title 6
Trading on the Intraday Auction Market Segments
Title 7
Trading on the Intraday Continuous Market Segments
Annex 1: Organized-Market Committee (OMC) Election Rules
Title 1 Election Procedure for the Organized-Market Committee
Title 2 ANNEX 1 to the OMC Election Rules
Annex 2: Operational Rules
Title 1 Products and Trading Parameters of the Day-Ahead Market
Title 2 Products and Trading Parameters of the Intraday Auction Market
Title 3 Products and Trading Parameters of the Intraday Continuous Market
Title 4 General Services Conditions
Title 5 Price List
Title 6 Technical Access Rules for Day-Ahead Market
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Title 7 Technical Access Rules for Physical Futures Market and Intraday Market
Annex 3: Code of Conduct
Annex 4: Definitions
Annex 5: Membership Agreement Sample
This proposed set of contents will be subject to change as more detailed rules drafting is carried out.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Title 1 General Principles of Organisation and Bodies
Chapter 1
Segments
Exchange
Operator’s
Article 1.1
Line of Business
Market
Organisation
and
Market
The Exchange is a fully electronically cleared market offering electricity trading on day-ahead and
intraday timeframes for the delivery of electricity in Ireland and Northern Ireland.
Article 1.2
The Exchange Operator
The Exchange Operator as defined under these Exchange Rules is a joint arrangement between
EirGrid Plc and SONI ltd (hereafter EirGrid and SONI) who together are a designated NEMO for the
day-ahead and intraday market segments of the Single Electricity Market (SEM).
Therefore, it is EirGrid and SONI together as the Exchange Operator that will enter into the relevant
agreements with the SEM Members in Ireland and Northern Ireland for admission purposes for
participation under these Exchange Rules.
The Exchange Operator shall ensure proper functioning of its day-ahead and intraday trading
platform for the Exchange.
Article 1.3
Organisational Bodies
The Exchange shall establish and maintain the following market organisational bodies and functions:
The Organised-Market Committee, elected by and from the representatives of the Exchange
Members to ensure the rules remain current and relevant, with an advisory role in the
process of amending the Exchange Rules and on general decisions related to the Exchange;
and
The Market Surveillance Office, being a function within the Exchange that monitors the
operation of the Exchange and the Exchange Members on a daily basis.
Article 1.4
Exchange Members
Exchange Members are admitted by the Exchange Operator and submit orders to enter, upon
execution, into contracts to sell or buy electricity.
Article 1.5
Clearing House
European Commodity Clearing AG (ECC) has been appointed by the Exchange Operator as the
Clearing House of the Exchange. As the Clearing House it acts as the central counterparty for
Payment and Delivery of the contracts traded or registered at the Exchange. The rules and
proceedings of ECC are stated in the ECC Clearing Conditions in its current version.
The Clearing House is a credit institution that handles the clearing of contracts traded on the
Exchange, in accordance with the specific procedures for each type of products. In a given Market
Segment, the Clearing House operates under the terms of an agreement signed with the Clearing
Members designated by the Exchange Members.
Article 1.6
Instruments governing conduct and participation
The following instruments govern the conduct, participation and organisation of the Exchange:
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Membership Agreements
These Exchange Rules, including:
o Operational Rules
[Note: these rules may be incorporated in a consolidated document as separate chapters for
each of the day-ahead and intraday markets and/or in annexes]
o
o
o
Article 1.7
Annex [X]- Code of Conduct
Annex [X] - Sample Membership Agreement
Annex [X] - Election procedure of the Organised-Market Committee
Operation of the Exchange
The Exchange Operator:
defines membership criteria for the Exchange;
signs Membership Agreements with Applicants to become Exchange Members;
defines the requirements and procedures for trading;
undertakes NEMO tasks in facilitating the day-ahead market as set out in Article 7 of CACM
provides regional and local intraday trading facilities in accordance with these Exchange
Rules;
where appropriate, transmits information about Transactions to a Clearing House for
clearing;
operates as the balance responsible party on behalf of the Exchange and (together with the
Clearing House via its central counter party) provides the Irish and Northern Irish
Transmission System Operator notifications of the physical deliveries of contracts traded on
the Exchange;
makes all decisions necessary for the integrity and orderly operation of the Exchange, in
particular by monitoring Exchange Members' compliance with the Exchange Rules;
supervises the conduct and activity of Exchange Members to ensure an orderly and fair
market; and
offers data reporting agreements to its Members as a registered reporting mechanism
according to Article 6 of REMIT IR.
[Note: As the detail for the other Titles around the day-ahead and intraday markets is defined,
additional roles may be added to this list]
Article 1.8
Official Language / Announcements
The official language of the Exchange is English.
Unless provided otherwise, announcements by any of the Market Organisational Bodies of the
Exchange Operator shall be transmitted electronically. The Exchange Operator shall determine the
electronic medium.
Chapter 2
Legal and Regulatory Framework
Section 1
Rules of the Exchange
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Article 1.9
Exchange Rules
When operating on the Exchange, Exchange Members shall observe and comply with the Exchange
Rules at all times.
Article 1.10
Membership Agreement
The Membership Agreement is entered into between the Exchange Operator and the Exchange
Member. By executing a Membership Agreement, the Exchange Member agrees to respect and
comply with the Rules of the Exchange at all times. The Membership Agreement defines:
the terms on which the Exchange Member will carry on its trading business with the
Exchange Operator;
the types of contracts that the Exchange Member is authorised to trade on each Market
Segment;
information and information sharing rights; and
the services provided by the Exchange Operator that are not defined in the Exchange Rules.
[Note: A sample of the Membership Agreement will be developed and provided in an Annex of these
Exchange Rules]
In the event of a conflict between the Membership Agreement and provision of the Exchange Rules,
the Exchange Rules shall take precedence.
The Membership Agreement cannot be assigned or transferred without the prior written consent of
the Exchange Operator. If the Exchange Operator grants its approval for the assignment or transfer
of the Membership Agreement, the Exchange Member that assigns or transfers its Membership
Agreement shall pay an administrative fee to the Exchange Operator, the amount of which shall be
specified in a Market Notice.
Article 1.11
[PLACEHOLDER - SHIPPING ARRANGEMENTS]
[Note: This section will be completed when detailed arrangements are confirmed.
Since the Exchange will be availing itself of market coupling services for the day-ahead market and
implicit intraday regional auctions it is clear that the Exchange Rules will need to have an Article
dealing with these arrangements. However, detailed understanding of these arrangements is still
being developed.]
Article 1.12
Exchange Rules
The Exchange Rules set out the terms on which the Exchange Operator carries out its duties and on
which Exchange Members trade in the market.
Article 1.13
Operational Rules
The Operational Rules in [insert cross reference] set out the General Conditions, Product details and
trading parameters, the Price List and the Technical Access Rules.
Article 1.14
Code of Conduct
The Code of Conduct in Annex [X] sets out the rules of conduct and market behaviour which must be
respected and complied with at all times by the Exchange Members.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Article 1.15
Changes to the Exchange Rules
The Exchange Operator may modify the Exchange Rules, provided that the:
the resulting Exchange Rules are consistent with European Commission Regulation
2015/1222;
the changes have been submitted to the Organised-Market Committee for its views
according to Section 2, Chapter 3 of the present Title.
The Exchange Rules as amended are binding on the Exchange Operator as specified under Chapter
3 of this Title, and on Exchange Members.
Article 16
Date of Effectiveness of Changes to the Exchange Rules
Changes to the Exchange Rules become effective on the date as is provided for in the relevant
Market Notice.
Article 1.17
Official Market Notices
The Exchange Operator shall notify Exchange Members of changes to the Exchange Rules and
Annexes by way of Market Notices.
Section 2
Status of Exchange Rules
Article 1.18
Contractual relations
Relations between the Exchange Operator and its Exchange Members are governed by contract.
Any disputes arising under, out of, or in relation to the Exchange Rules shall be interpreted,
construed and governed in accordance with the laws of Northern Ireland.
If an Exchange Member fails to fulfil a material obligation arising directly or indirectly under these
Exchange Rules, the Exchange Operator is entitled to suspend or terminate the Membership
Agreement with the Exchange Member.
[Note: The provisions dealing with breaches and their consequences under these rules, based on
EPEX rules and rules of other EU jurisdictions, would benefit from a review to ensure consistency of
approach and alignment with local practice. Further consideration is being given to these rules in
that context and to meet requirements of the exchange service providers, including the Clearing
House]
Article 1.19
Members' Rights and Obligations
The services provided to Exchange Members by the Exchange Operator as well as Exchange
Members’ rights and obligations in respect of the Exchange are set out in the Exchange Rules.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Chapter 3
Market Organisational Bodies of the Exchange
Section 1
Operating Company
Article 1.20
Exchange Operator
Subject to any limitation of liability contained in these Exchange Rules, the Exchange Operator is
responsible for operating the Exchange day-ahead and intraday markets. The Exchange Operator
may sub-contract any of its operational tasks regarding the operation of the Exchange.
The name of its sub-contractor, as well as the subcontracted operations will be communicated by
the Exchange Operator to its members via a Market Notice.
[NOTE: Matters of liability concerning the Exchange Operator, its service providers and members
remain under legal consideration. Further details will be provided in a subsequent draft of these
rules.]
In case of urgency, the Exchange Operator is entitled to issue any appropriate orders or take any
measures to ensure the orderly conduct of the Trading on the Exchange and the settlement of the
traded Transactions. These orders, decisions and measures are binding for all Exchange Members.
Section 2
Organised-Market Committee
NOTE: Consideration is being given as to the necessary composition and representation of different
participant types on the committee.
The trading and settlement code modifications committee structure may be a reasonable starting
point for consideration.
These arrangements should also be informed by any relevant regulatory authority oversight of
NEMO(s).
Early views from participants would be welcome on reasons why it might be appropriate to either
remain or move away from the make-up of industry representation reflecting that on the
modifications committee.
Nevertheless, the following draft articles and comments are largely based on the equivalent
provisions in market rules from other EU jurisdictions.
Article 1.21
Composition of the Organised-Market Committee
The Organised Market Committee is a consultative member committee of the Exchange.
The composition of the Organised-Market Committee shall reflect the diversity of Exchange
Members.
The Organised-Market Committee comprises [number to be confirmed] members.
The members of the Organised-Market Committee are elected by Exchange Members for a 2-year
period. The election rules relating to the composition of the Organised-Market Committee are set
out in Annex [X] to these Exchange Rules [yet to be developed].
The Organised-Market Committee meets at least twice every year, with additional meetings if
deemed appropriate by the members of the Committee.
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The Exchange Operator or a quorum of three members of the Committee may require an OrganisedMarket Committee meeting.
[NOTE: While the other market rules do not include any provisions about the form of notification
required to call a meeting, a subsequent rule, article 1.24, defines when a quorum of members is
present at committee proceedings, and this is subject to there being “correct notification of the
meeting” – may need to develop rules to cover this.]
Article 1.22
Duties and Rights of the Organised-Market Committee
The Organised-Market Committee has the following roles:
to be consulted on proposals for changes to the Exchange Rules, and to express its opinion
and suggest modifications regarding such proposals before they are accepted or rejected by
the Exchange Operator;
to receive and consider proposals for changes to the Exchange Rules from any Exchange
Member, and where the Organised-Market Committee considers it appropriate, develop
recommendations for consideration by the Exchange Operator;
to express opinions and make recommendations to the Exchange Operator regarding the
introduction of new Trading Systems; and
to express opinions and make recommendations to the Exchange Operator regarding
introduction of new Products, Market Segments or Market Coupling.
As it has an advisory role, the recommendations, proposals and other advices of the OrganisedMarket Committee are not binding on the Exchange Operator. However the Exchange Operator shall
provide a written explanation to the Organised-Market Committee if its recommendation, proposal
or advice is not accepted.
Article 1.23
Chairperson and Deputy Chairperson of the Organised-Market Committee
In its first meeting following an election, the Organised-Market Committee shall elect a chairperson
and a deputy chairperson from among its members by means of a secret ballot.
The chairperson shall preside over the proceedings of the Organised-Market Committee, or if he or
she is unable to do so, the deputy chairperson shall preside. If the chairperson and deputy
chairperson both are prevented from attending the proceedings, then the chairperson or, if the
chairperson is unable to do so, the deputy chairperson shall nominate a member of the OrganisedMarket Committee to serve as chairperson for those proceedings.
Article 1.24
Quorum and Recommendations of the Organised-Market Committee
The Organised-Market Committee shall have a quorum when more than half of its members are in
attendance, either in person, or effectively represented by another member, as the result of the
correct notification of proceedings.
In developing recommendations to the Exchange Operator, the Organised-Market Committee may
be required to pass resolutions.
Resolutions shall be passed by a simple majority of the valid votes cast. In case of a tied vote, the
chairperson of the meeting shall cast the deciding vote. If the chairperson abstains from voting in
case of a tied vote, the motion shall be deemed rejected.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
If unable to attend, a member of the Organised-Market Committee may allow another member to
submit his or her written vote.
Resolutions can also be passed in writing, by e-mail or facsimile. A motion shall be deemed to have
been passed if more than half of the members of the Organised-Market Committee have responded
within a stipulated period and if the majority of the Organised-Market Committee has agreed to the
motion. Any member of the Organised-Market Committee shall be able to demand that the decision
be taken by vote after oral debate. The chairperson shall comply with such a request, for which a
detailed reason must be given, by calling a meeting without undue delay.
At the request of one quarter of the members, votes shall be taken by secret ballot.
The content and outcome of the meetings and of the decision making process shall be recorded in
writing and signed by the chairperson of the meeting. With regard to votes cast in writing, by e-mail,
facsimile or by telephone as stipulated above, the minutes and the outcome of the decision making
process can also be signed by Exchange Operator’s nominee for this purpose.
Article 1.25
Organised-Market Committee Working Groups
The Organised-Market Committee may establish Working Groups to consider specific matters.
Article 1.26
Confidentiality Obligation of the Organised-Market Committee Members
The members of the Organised-Market Committee must maintain the strict confidentiality of all
confidential information they receive in the course of their duties as Organised-Market Committee
members, unless information subsequently becomes publicly available.
Section 3
Market Surveillance Office
[This section will describe arrangements for market oversight within the exchange operator.
Based on the SEM context, including the likely entities, roles, contracts and risk allocation in the
SEM, initial thinking is that this can be an internal function within the Exchange Operator.
However, this position will become clearer as further details are developed (including through
consultation with the Exchange’s service providers on the solution design functional and technical
specifications, and taking into account any views or requirements of the Regulatory Authorities).]
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Title 2 Admission
Chapter 1
Exchange Membership
Article 2.1
Exchange Member
An Exchange Member is a legal entity that signs a Membership Agreement or an equivalent
agreement with the Exchange Operator and is thereby authorised to trade directly in the Day-Ahead
and Intraday markets. The Exchange Operator shall not limit the number of Exchange Members.
The Exchange Operator may not refuse to conclude a Membership Agreement if the Applicant
satisfies the admission requirements in Article 2.4 below and requirements in the Trading and
Settlement Code are satisfied.
Article 2.2
Types of Exchange Member
[This section will be completed as details become clearer through consultation with the exchange’s
service providers on the solution design functional and technical specifications.
Reviewing market rules from other EU jurisdictions, where types of Exchange Member are defined,
this is normally to account for particulars of the local market arrangements. It is likely given the ISEM arrangements that a “Trading member” is the only type of exchange member valid for these
rules.]
Article 2.3
Trading on the Exchange
Trading on the Exchange shall only be carried out by an approved Exchange Member.
Chapter 2
Admission of Exchange Members
Article 2.4
Eligibility for Exchange Membership
In order to become an Exchange Member authorised to participate in trading on the Exchange, the
Exchange Member Applicant must:
satisfy the Exchange Operator that the Applicant is a reliable company with the economic
capacity to be an Exchange Member;
be a party to the Trading and Settlement Code and have registered at least one Unit under
that Code;
have secured all relevant authorisations and licences for trading in electricity (where
applicable);
have entered into an arrangement with the Clearing House for the orderly settlement of
Transactions;
have appointed and identified to the Exchange Operator its Authorised Users;
be equipped with the necessary technical connection for trading on the systems of the
Exchange; and
be registered with the Regulatory Authorities under REMIT.
Article 2.5
Admission to the Exchange
The Exchange Operator decides admission of Exchange Members in compliance with these Exchange
Rules.
The Exchange Operator can refuse an incomplete application.
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When authorising new Exchange Members, the Exchange Operator shall seek documentary evidence
to verify compliance with membership requirements.
Once all membership requirements have been met, the Exchange Operator will sign the Membership
Agreement and send an admission letter to the new Exchange Member, stating the effective date of
Membership for trading.
Upon receipt of the admission letter, the new Exchange Member is entitled to trade at the Exchange
from the effective date specified.
The name of a new Exchange Member will be published in a Market Notice to the other Exchange
Members and the admission of this new member will be published on the Exchange Operator’s
website.
If the Exchange Operator decides not to admit an Applicant, it shall give the Applicant reasons for its
decision.
Article 2.6
Required Information for Admission
[This section will be finalised as detailed arrangements are agreed. The list below is provided by way
of example and is in part based on the items listed in EPEX Exchange Rules Title 2, s40. For the SEM,
the list may also include forms required for registration with the clearing house.]
Membership applications must include the following elements:
duly signed Membership Agreement in 2 originals;
an identification form (which includes information identifying the company or main contacts
and statements regarding the company);
a filled-out form about the authorised signatures of the company regarding Exchange
trading;
a filled-out form about the authorised trader(s);
a filled-out trading account form;
a filled out “Know Your Customer” questionnaire;
and the following supporting documents:
company registration extract (issued within 15 calendar days);
copy of licence issued by the appropriate National Regulator or its predecessor (or a
statement that Applicant will buy electricity as a consumer);
notarised specimen of signature of the authorised persons;
a copy of the last annual report, drafted in accordance with the Applicant’s national
legislation;
verification that the [appropriate registrations have been completed under the Trading and
Settlement Code];
the current articles of association / statutes;
copy of VAT certification;
technical forms;
statement whether the applicant wishes to conclude the Data Reporting Agreement with the
Exchange Operator pursuant to Article 6 of REMIT IR.
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The Exchange Operator can request any additional information that is necessary within reason to
take into consideration the special characteristics of the Applicant.
The Applicant guarantees the validity of such information and substantiates it, where appropriate,
by providing certified copies of the original documents.
Article 2.7
Authorised Representatives
Each Exchange Member shall appoint at least one authorised representative to act on its behalf as
the Exchange Operator's contact.
Exchange Members may also appoint:
a front office representative;
a back office representative;
a delivery representative;
an invoicing/payment representative;
an IT representative; and
a representative regarding Membership issues.
Changes to an Exchange Member’s appointed representatives can only be made by the Exchange
Operator at the request of an authorised representative of that Exchange Member.
Article 2.8
Exchange Member Authorisations, etc.
An Exchange Member must have and maintain at all times all relevant state approvals, permissions,
licences and admissions that are required under state laws for trading electricity and to fulfil
concluded transactions.
The Exchange Operator may request from an Applicant or an Exchange Member additional
documents or information at any time, and within a specified time limit, to ascertain its compliance
with this rule.
[Note: the following rules will be reviewed with other provisions dealing with breaches and their
consequences.]
Where, in the reasonable opinion of the Exchange Operator, it is necessary to do so, the Exchange
Operator may either itself or through an agent, conduct an assessment to verify the Applicant or
Exchange Member meets the requirements for Exchange Membership at the Applicant’s or
Exchange Member’s expense, and require the Applicant or Exchange Member to submit such
statements and documents as the Exchange Operator may deem appropriate.
Applications for the admission to the Exchange can be suspended as long as the Applicant does not
furnish the evidence required under this rule.
Where an Exchange Member does not furnish the evidence required under this rule, the provisions
in [add cross reference] apply.
Chapter 3
Requirements for the Orderly Settlement of Transactions
Article 2.9
Requirements for the Orderly Settlement of Transactions
In order to ensure the orderly settlement of transactions on the Exchange, each Exchange Member
shall:
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
take part in clearing on ECC in accordance with the respectively valid Clearing Conditions of
European Commodity Clearing AG (ECC);
have sufficient technical facilities at its disposal which guarantee correct trading and
settlement via the trading systems of the Exchange and clearing facilities of ECC
ensure that its technical facilities and equipment do not impair trading on the Exchange and
the settlement of transactions on the Exchange, and comply with rules pertaining to
technical facilities set out in [CROSS REFERENCE TO BE PROVIDED];
keep its technical facilities in good condition, and guarantee their continuous readiness for
operation;
provide the personnel required for trading and settlement and take satisfactory
organisational precautions.
[Note: In other market rules, the first bullet point above is deemed to be fulfilled when:
The Member has concluded a Clearing Agreement with ECC for the market applied for.
Provided that the Member intends to become a Non-Clearing Member for transactions for the
respective market in terms of the Clearing Conditions of ECC (Non-Clearing Member), such
participant shall conclude a respective agreement with a Clearing Member and provide any
security required by the Clearing Conditions or by the respective agreement;
Further the Exchange Operator shall have a confirmation from ECC for each traded Contract
that the Member is approved by ECC as a Trading Participant in this Contract. The approval as
a Member requires, in particular, the necessary declarations and evidence of the capability for
physical settlement of Transactions.
Appropriate equivalent provisions will be required for this Exchange. These may include
The Exchange Member has:
o concluded a Clearing Agreement with ECC for the market applied for; or
o has concluded a Non-Clearing Agreement with ECC and a Clearing Member; or
o has been granted a Direct Clearing Participant licence by ECC for the market
applied for.]
Chapter 4
Requirements for Technical Access
Article 2.10
Requirements for Technical Access
For connection to the trading systems of the Exchange an Exchange Member’s IT-facilities shall
comply with the technical requirements set out in the Exchange Rules [CROSS REFERENCE TO BE
PROVIDED].
The Exchange Operator (or its authorised subcontractor) is permitted to undertake inspection and
testing on the Exchange Member’s premises to confirm compliance with these requirements.
[Note: Will likely require some procedures in place for this, e.g. subject to a formal request with
appropriate notice etc.]
Upon application of an Exchange Member or by an Applicant for admission, the Exchange Operator
may permit the installation of front-end systems in the offices of the Exchange Member outside the
country in which the Exchange Member or Applicant has its registered office, provided that the
application of and compliance with technical provisions of the Exchange Rules are also ensured in
the country in which the additional offices is situated.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
If the Exchange Operator permits an Exchange Member to use order routing systems in accordance
with the Operational Rules, such Exchange Member shall be responsible for ensuring that the order
routing facility is used properly, for the designated purpose and in accordance with the provisions of
the Exchange Rules. This Exchange Member responsibility also applies to any orders which are
entered into the trading systems of the Exchange via order routing by third parties who are not
admitted to the Exchange. Should the Exchange Member fail to comply with these requirements, the
Exchange Operator may restrict or revoke the permission to use an order routing system.
The Exchange Operator may require its members to support and participate in technical testing in
order to confirm compliance with technical requirements for access to the trading platform to
deliver changes or updates to the trading infrastructure or trading software if appropriate.
The Exchange Operator acknowledges that an Exchange Member’s performance during
implementations or upgrades or cases of technical changes by the Exchange Operator will be on a
reasonable endeavours basis.
All Exchange Members must pass conformance testing to be allowed to access to the Exchange
trading platform.
Article 2.11
Trading Accounts
After signing a Membership Agreement, the Exchange Operator will assign to the Exchange Member
one or more Trading Account(s) with a username and password per trading system in line with the
request of the Exchange Member.
The Exchange Member can ask the Exchange Operator to create additional Trading Accounts or to
delete existing Trading Accounts.
Chapter 5
Admission of Traders
[THIS CHAPTER IS UNLIKELY TO BE REQUIRED]
[EPEX and other market rules include restrictions on “Traders – which we interpret as being ”users”
of the market systems in the SEM context - based on skills, qualifications, etc. These rules include a
requirement for these “Traders” to pass a test of some description to demonstrate competence to
connect to and use the market systems. However, this requirement is to be discussed and clarified
with the service provider to confirm whether such restrictions would need to be applied in the
context of the SEM]
Chapter 6
Membership Procedures
Article 2.15
Duration of Membership
Exchange Membership lasts for the same period as the Membership Agreement.
Article 2.16
Communication of Information
After the granting of admission to trading, Exchange Members shall notify the Exchange Operator
without delay of any matter which could lead to the conditions for admission no longer being
satisfied, including but not being limited to the following:
1. Changes to its legal structure and circumstances, such as:
changes in terms of compliance with one of the Membership requirements;
termination of, suspension of, or changes to an agreement with a Clearing Member;
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
changes to the information communicated with or documents appended to the
Membership application; and
termination or suspension of its registrations under the Trading and Settlement Code;
2. Changes to the Member's technical or organisational situation, insofar as such changes have
an impact on access to the Exchange; or
3. Changes to the legal or regulatory framework or to judicial practice that affect the Exchange
Member's capacity and its compliance with the Membership requirements and these
Exchange Rules.
Article 2.17
Resignation, Suspension and Revocation of Membership
The provisions dealing with breaches and their consequences under the EPEX and other rules
appear likely to benefit from a review to ensure consistency of approach, and alignment with local
practice in the context of the SEM. Further consideration is being given to these rules in that
context, and to meet the requirements of Exchange service providers, including the Clearing
House, and any requirements of the Regulatory Authorities.
Across all Exchange Rules, provisions will be streamlined and made clear, consistent, fair and
workable.
We note that provisions based on EPEX and other market rules would deal with:
member resignation
circumstances in which the exchange operator may revoke or suspend membership
breaches of the membership agreement or exchange rules
default in payment of fees
breach of clearing conditions
clearing house recommendations for revocation or suspension
notification procedures
consequences of resignation, revocation or suspension
Rules will also deal with opportunities to remedy breaches, etc.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Title 3 Code of Conduct and Audits
Article 3.1
Behavioural Rules
Exchange Members shall observe and comply with the Code of Conduct in Annex [3] [to be
developed] at all times when doing business in the market.
Article 3.2
Principles
[THE FOLLOWING RULES WILL BE REVIEWED TOGETHER WITH OTHER PROVISIONS DEALING WITH
BREACHES AND THEIR CONSEQUENCES]
Rules based on the EPEX model would be along the following lines:
When the Exchange Operator considers that an Exchange Member's situation or actions are no
longer consistent with its undertakings or that they are detrimental to the orderly operation of the
market, it will order the Exchange Member to remedy the matter immediately.
If the Exchange Member is unable to bring its situation back into line with relevant requirements, or
if it does not cease the challenged actions, and implement measures to remedy the consequences of
its actions within the given time period, then the Exchange Operator can issue a private or public
warning to the Exchange Member, order the suspension of its activities, or withdraw its Membership
status.
In an emergency, the Exchange Operator can suspend an Exchange Member's activities with
immediate effect. In such case, the Exchange Operator may determine on a case by case basis how
to manage the existing client positions of the suspended Exchange Member.
Suspension or withdrawal of membership shall automatically entail the elimination of all the
Exchange Member's Orders in the Order Book.
In any event, termination of a Membership Agreement, which triggers the loss of Membership status
in compliance with this article, shall not prevent the Exchange Operator from seeking compensation
for all direct and/or indirect damage caused by the Member's behaviour, especially in the event of
injury to the image of the market resulting from damage to the integrity or orderly and fair
operation of the market.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Title 4 Contracts, Products and Market Segments
[TITLE 4 will be reviewed and completed when member categories, contracts and products for the
different markets are clear.
Indicative rules and explanatory notes are provided below to indicate current interpretation and
thinking of what my apply based on rules from other EU jurisdictions.]
Chapter 1 Contracts and Products
For the purposes of this draft Title 4, the following definitions apply.
Product – a product represents a way of submitting a sale or purchase into the day-ahead or
intraday markets. Products are how participants define the volume and price relating to any sale or
purchase offered as well as the duration. Examples of Products are simple orders, linked block
orders, simple orders with complex conditions, etc. Products and Order Types are synonymous.
Orders – an offer to sell or bid to buy submitted to the Exchange operator. While products are used
to define an order, each order is a specific instance of a Product.
Order Book – Exchange Members submit orders to the Order Book which represents the collection
of all submitted orders for a given Trading Day / Period for a given Market Segment
Contract – a contract is a cleared order; that is, an order that has been executed in the day-ahead or
intraday markets.
Section 1
Contracts description and specifications (principles)
Context:
This section will describe how a Contract relates to a cleared order and requires delivery or
consumption of electricity and financial settlement of the contract. Physical delivery is satisfied by
notification of the contracts to the Market Operator of the balancing arrangements.
Article 4.1
Nature of the Contracts
The Contracts traded on the SEM are commercial contracts on commodities for the physical Delivery
of electricity within the Irish and Northern Irish transmission system.
Article 4.2
Effect of the Contracts
The execution of an Order in the market entails the firm and irrevocable commitment at a set date
and time:
1. for the buyer to take delivery of and to settle the underlying executed Order at the set Price;
2. for the seller to deliver and to receive settlement of the underlying executed Order at the
set Price.
On the day-ahead and intraday markets, the delivery obligations are executed by the way of
nomination of the purchases or sales to the Market Operator as defined under the Trading and
Settlement Code for the SEM.
Section 2
Rules for listing Products
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
This section concerns the rules for listing a Product on the Exchange. Products can be added by the
Exchange Operator following consultation with the Organised-Market Committee. In deciding
whether to allow a product onto the local exchange for trading, the Exchange Operator must take
into consideration [the views of the PCR project and the software owners].
Article 4.3
Admission of Products
The Exchange Operator makes decisions concerning the listing, suspension and delisting of Products.
Such decisions are made following consultation with the Organised-Market Committee. A Product
shall only be admitted on the Exchange if orderly trading is expected to be maintained.
Article 4.4
Product Specifications
Annex [X]: Operational Rules [to be developed] sets out the specifications for each Product offered
on the day-ahead and intraday markets.
Product specifications for the day-ahead market segment of the SEM are stipulated under [cross
reference to be added]. Product specifications for the intraday market segment of the SEM are
stipulated under [cross reference to be added].
Section 3
Rules for activating, suspending and delisting Products
Article 4.5
Segment
Decision not to open the Order Book for a Trading Day for a Market
Notwithstanding the Product specifications in Annex 2, the Exchange Operator can decide not to
open the Order Book for one or more Trading Days for one or more Market Segments, either
temporarily or permanently.
Save in exceptional circumstances, this decision is communicated to the Exchange Members by
Market Notices at least ten (10) calendar days before the date initially scheduled for the opening of
Order Book for this Trading Day.
Article 4.6
Revocation and Suspension of a Product
The Exchange Operator may suspend trading in a specific Product on the Exchange if the Exchange
Operator considers orderly trading on the Exchange is jeopardised or if the Exchange Operator
considers such action necessary for any other reason.
The Exchange Operator may also suspend trading (entirely, for an individual Market Segment or
individual Products) if the Exchange Operator considers this necessary for technical reasons.
The Exchange Operator shall inform the Exchange Members without delay where a Product or
trading on a Market Segment is suspended.
If trading using specific Products on the Exchange is suspended entirely or in part, no new Orders
may be entered for the suspended Product or using the suspended Product. All existing Orders will
be cancelled. The resumption of trading in the suspended Products shall commence with a PreTrading period.
Article 4.7
Activation of a Product or Order Type
The Exchange Operators may make certain Products unavailable for trading until all necessary
(technical, regulatory or any other) testing has been completed. In such case, the Exchange Operator
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
shall inform the Exchange Members in a Market Notice that such Products shall be regarded as
suspended.
Any suspended Product will become activated and available for trading after all necessary testing
has been completed and it can be demonstrated that activation of the Product will not jeopardise
orderly trading on the Exchange. Where a previously suspended Product can be activated, the
Exchange Operator shall issue a Market Notice to Exchange Members on the activation or the
withdrawal of suspension with an effective date at least 5 trading days later than the date of issue of
the Market Notice.
Products are only tradable if they are listed in Annex [X]: Operational Rules.
Chapter 2
Market Areas
Article 4.8
SEM Market Areas
On the Exchange, Contracts can be traded in respect of electricity with delivery on the Irish and
Northern Irish transmission system managed by EirGrid and SONI TSOs respectively.
The Market Operator via separate contractual relationship with the market operator companies of
Coupled Markets and with the Shipping Agent of the SEM assures the coupling of the Exchange’s
DAM and IDM Market Segment’s Market Area to the Market Areas of the Coupled Markets.
Chapter 3
Market Segments
Context:
This section will set out what a market segment is. Within the market area of the Exchange, a market
segment is a combination of a Trading Procedure and a period of time. A Trading Procedure defines
the way in which trade is executed, e.g. day-ahead auction, intraday auction, intraday continuous
matching, etc., while the period of time is the duration covered by each Trading Procedure, e.g. for
the day-ahead auction the period of time would be the complete trading day, for the intraday
continuous, it may be as short as a single trading period.
Article 4.9
SEM Market Segments
A Market Segment consists of a Market Area associated with a Trading Procedure and Trading Day or
Trading Period(s).
Currently the following Market Segments exist on the Exchange:
Day-Ahead Auction;
Intraday Auctions; and
Intraday Continuous matching.
The Trading Procedures for the Market Segment(s) are described in Annex [X]: Operational Rules [to
be developed].
Chapter 4
Electronic platform of trading
Article 4.10
Fully Electronic Facilitated Market
The Exchange is a fully electronic facilitated market.
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DRAFT NEMO OPERATING RULES – DISCUSSION DRAFT DATED 7 SEPTEMBER 2016
Exchange Members transfer Orders to Exchange Trading Systems by means of electronic
transmission. In circumstances of technical malfunctions, the Exchange Operator is entitled to
permit the usage of other methods of transfer.
The Exchange Operator is entitled to temporarily interrupt the access to Exchange Trading Systems
for a single or all Market Segments for one or all of the Exchange Member(s) should this be
necessary for technical reasons. The Exchange Operator makes the decision as to the start and end
of the interruption. The Exchange Members concerned must be informed of the interruption of the
access to Exchange Trading Systems and the end of the interruption by e-mail.
Article 4.11
Technical Malfunctions
The affected Exchange Members shall inform the Exchange Operator without delay of any
malfunction which occurs on the technical equipment of the Segments during the business hours.
In case of technical malfunctions, the Exchange Operator or third parties commissioned shall be
authorised to take any suitable and appropriate measures which are required to safeguard or
resume proper trading or settlement. For example, the Exchange Operator or the third party
commissioned can exclude individual Exchange Members or all Exchange Members from trading
temporarily; they can suspend trading or delete orders by individual or all Exchange Members. The
measures taken by the Exchange Operator or by the third parties commissioned shall be binding for
all Exchange Members. Further rules are contained in Annex [X]: Operational Rules.
In case of electricity supply emergencies and significant malfunctions of the electricity system, the
Exchange Operator may suspend the operation of the Exchange.
The Exchange Operator provides unrestricted technical support only during the business hours.
The Exchange Operator is authorised to commission third parties to support Exchange Members.
However, a third party commissioned shall only be granted access to the trading data of the
Exchange Members or a right of inspection of such, if it has signed an appropriate confidentiality
agreement.
Article 4.12
Time
The times referred to in these Exchange Rules correspond to the time on the servers on which the
Exchange systems run. This is based on official time, and the Exchange Operator makes every effort
to ensure that any difference between CET and the time on the servers on which the Exchange
systems run is less than one minute.
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