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arXiv · 2609.29108

Functional Architecture of European Electricity Trading Markets: Requirements for AI Supported Trading Systems under Regulatory Constraints

Walter Kurz·Wojtek Stricker
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Abstract

European electricity trading in the EU operates as a constrained multi-layer system in which legal design, exchange microstructure, and network physics are executed jointly across forward, day-ahead, intraday, and balancing horizons. This paper develops a functional architecture for AI-supported trading that is aligned with market-coupling mechanics, cross-zonal transfer constraints, and compliance obligations under REMIT, MiFID II, MiFIR, and EMIR. The contribution is a formal system specification composed of a decision-state vector, residual-exposure accounting, constrained optimization objective, executable-action permission gate, and fail-closed AI control logic with auditable records. The analysis maps major Nominated Electricity Market Operator (NEMO) venues and related exchange operators into an operational venue topology and identifies where cross-border coordination fails in practice: interface-level timing, permission heterogeneity, and balancing-layer coupling. The resulting framework proposes how AI can be deployed as a bounded decision component inside regulated market operation with explicit governance, rather than as an unconstrained prediction layer.

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Walter Kurz, Wojtek Stricker. 2026-09-24. Functional Architecture of European Electricity Trading Markets: Requirements for AI Supported Trading Systems under Regulatory Constraints. https://doi.org/10.5281/zenodo.21901249

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