REMIT II – The growing focus on algorithmic trading

One interesting development in the REMIT II landscape is the increasing regulatory focus on algorithmic trading. In its latest REMIT Quarterly, published in August 2026, ACER highlights how its market surveillance is adapting to the growing use of automated trading. ACER specifically notes that algorithmic trading can operate at speeds and volumes beyond human capacity, creating new challenges for detecting potential market abuse. 

The challenge is no longer just about asking “did a trader manipulate the market?” It is increasingly about whether regulators can identify potentially manipulative behaviour when trading decisions are being made and executed by algorithms, often at speeds and volumes that would be impossible for a human trader.

A few recent developments point in this direction:

• More detailed reporting requirements: The revised REMIT Implementing Regulation entered into force in 2026, with a focus on improving the quality and consistency of the data reported to ACER. This is particularly important for algorithmic trading, where regulators may need to reconstruct large numbers of orders, cancellations and transactions to understand what an algorithm was actually doing.
• Greater cross-border enforcement powers: ACER is also beginning to use its expanded investigatory powers for cross-border cases during the second half of 2026. This is relevant because algorithmic trading strategies can operate across multiple markets and jurisdictions, making purely national monitoring more difficult. 
• A growing surveillance workload: At the end of Q2 2026, ACER reported 453 REMIT breach cases under review, highlighting the scale of the challenge facing regulators.

This raises an interesting question for REMIT II: 

To what extent does REMIT II need to look beyond the behaviour of market participants and increasingly consider the algorithms and systems through which trading activity is carried out?

How is this issue compounded by real-world negative electricity prices under REMIT II? 

The issue becomes particularly interesting in the electricity market, where negative prices are a legitimate and increasingly visible market outcome. ACER’s REMIT transaction-reporting guidance explicitly provides for negative prices: the price field should contain the negative number, while the notional amount is reported as an absolute value.

1. Negative prices are a legitimate market outcome

Negative electricity prices can occur when there is excess generation relative to demand, particularly during periods of high renewable generation and limited flexibility to reduce output. The fact that a price is negative does not, by itself, indicate market manipulation. 

So a trade at: 

−€100/MWh × 10 MWh 

would be reported as a negative price rather than being rejected or converted to zero. The notional amount would still be reported as an absolute value under ACER’s reporting guidance.

2. The regulatory question is more about the behavior behind the negative price

This is where REMIT II becomes particularly interesting from a market-abuse perspective. 

REMIT prohibits transactions or orders that give, or are likely to give, false or misleading signals about supply, demand or price, or that secure or attempt to secure a wholesale energy price at an artificial level, subject to the relevant legitimate-reason and accepted-market-practice provisions. 

Therefore, ACER could potentially investigate how a negative price was created, rather than simply looking at the fact that the price was negative. 

For example:

The distinction is important because negative prices themselves are not the regulatory problem. The focus is on whether the trading activity reflects genuine market conditions or whether orders and transactions are being used to create a misleading signal or artificial price. 

Negative pricing also creates a particularly interesting surveillance problem because an algorithm may be making thousands of decisions around very volatile periods. A strategy could legitimately respond to factors such as renewable generation forecasts, balancing costs, transmission constraints or expected demand. From a surveillance perspective, however, the same speed and complexity that makes algorithmic trading commercially useful can make it harder to determine whether a pattern of orders represents legitimate trading or potentially manipulative behaviour. 

This is where improved REMIT data becomes increasingly important. ACER’s reporting framework captures transactions and orders, giving regulators a much richer dataset with which to reconstruct market activity and identify unusual patterns. 

The combination of algorithmic trading + increasingly volatile electricity prices + more detailed transaction data could therefore become an important area of REMIT II enforcement. 

REMIT II does not seek to prevent negative energy prices. Instead, the regulatory challenge is to distinguish between legitimate automated trading responding to genuine market conditions and automated behaviour that creates or exaggerates an artificial price signal. 

That distinction could become increasingly important as renewable generation grows and periods of very low or negative electricity prices become a more regular feature of European wholesale energy markets. 

References:

1. ACER REMIT Quarterly Report for Q2 2026

Reviewing your REMIT II reporting approach?

As algorithmic trading, volatile market conditions and more detailed reporting requirements come together, firms may need to take a closer look at the quality, completeness and traceability of their REMIT data.

If this is something your team is working through, feel free to use the form below to get in touch with us, or email us at [email protected]. We’d be happy to discuss your approach and any reporting challenges you’re seeing.

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