Since 7 May 2024, REMIT has had a rule for algorithmic trading in wholesale energy. It is Article 5a. It asks firms that trade by algorithm to notify the regulator, to control and test their systems, and to keep records for five years. From 29 October 2027, every reported transaction will also name the algorithm that placed it. This guide explains which software the rule covers and what it asks you to keep.
Jordan Dimov (A115). Published 29 October 2026. Sources are at the end. This is a summary for learning, not legal advice.
1. What counts as algorithmic trading
REMIT defines algorithmic trading in Article 2(18). It is trading where a computer algorithm automatically decides the individual parameters of an order. That happens with limited or no human intervention. The parameters are:
- whether to place the order at all;
- its timing;
- its price;
- its quantity;
- how it is managed after it is sent.
In scope, when it decides an order's parameters:
- bidding software that sets the price or volume of a day-ahead or intraday order;
- dispatch software, where it decides when and how much to offer into the market;
- an AI agent that sets a bid's price or volume.
Not in scope:
- order routing;
- processing that decides no order parameters;
- order confirmation;
- post-trade processing, such as trade capture.
The test is what the software decides, not what it is called. Dispatch software is in scope because timing and quantity are order parameters. An agent that captures trades or checks confirmations is out of scope. Its controls come from the firm's general rules, not from Article 5a.
New to orders, exchanges and the people who trade on them? Energy Trading 101 covers the basics.
2. What Article 5a asks for
Article 5a(1) asks for effective systems and risk controls. In plain words, the trading systems must:
- be resilient and have enough capacity;
- work within thresholds and limits;
- prevent erroneous orders;
- not contribute to a disorderly market;
- comply with REMIT and with the rules of each market they trade on.
The firm also needs business continuity arrangements. Its systems must be "fully tested and properly monitored".
Article 5a(2) asks the firm to notify its national regulator and ACER that it trades by algorithm. Notification goes through CEREMP, the registration system for market participants.
3. Five years of records
Article 5a(2) also sets the record duty. The firm "shall arrange for records to be kept for five years". The records cover four things:
- a description of its algorithmic trading strategies;
- the trading parameters or limits the systems run under;
- the key compliance and risk controls;
- the details of the testing.
The records must be "sufficient to enable" the regulator to monitor compliance. This is a duty today, not in 2027. It applies to each algorithm the firm runs. Strategies, limits and controls change over five years, so the records have to follow those changes too.
4. What the regulator can ask to see
The national regulator "may require" the firm to provide this information. It can ask "on a regular or ad hoc basis". The request can cover the same four things the records hold: strategies, limits, controls and testing.
So the records are not only kept. They must be ready to hand over when the regulator asks.
5. From 29 October 2027: the Algorithm ID
Implementing Regulation (EU) 2026/256 changes transaction reporting under REMIT. Its Article 3 and Annex apply from 29 October 2027. From then, Table 1 of the transaction report carries a new field. It identifies "the algorithm used for placing or conclusion of the transaction".
Sometimes the organised market place does not know the algorithm's code. Then the market participant gives the code to the market place. It must do so by the time of reporting. The market place keeps it for five years. The participant stays responsible for its accuracy, under Article 14. The participant has no legal duty to keep its own copy.
ACER has explained why the field exists. It lets ACER "precisely distinguish the transactions related to human or algorithmic trading activities".
Put the two rules together. When surveillance flags an order after October 2027, the report names the algorithm behind it. The regulator's Article 5a request then has an exact target: that algorithm's strategy, limits, controls, tests and changes.
6. Who it applies to
Article 5a applies to market participants registered in the EU whose algorithms set order parameters. That includes the algorithmic desks of utilities, continental intraday traders, and battery optimisers that bid EU day-ahead and intraday markets with algorithms.
Article 5a is EU law. We have not found a UK equivalent, though our search was not exhaustive. For a group based in Great Britain, the rule can reach it through the group's entities registered in the EU.
Where to go next
For where agents and algorithms work on a trading desk, and the controls that come first, see AI in trading.
Sources
- Regulation (EU) No 1227/2011 (REMIT), consolidated text as of 7 May 2024, Articles 2(18) and 5a. EUR-Lex, CELEX 02011R1227-20240507.
- ACER, open letter on Implementing Regulation (EU) 2026/256, 9 April 2026.
- ACER and European Commission, REMIT webinar slides, 23 April 2026 (slide 39).
- ACER, REMIT Quarterly, Q1 2026 (44th edition).