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

arXiv: https://arxiv.org/abs/2609.29108 · HTML: https://mlsanity.com/paper/2609.29108/

## Key facts

- No citing papers in the map yet (data through 14 Oct 2026).
- Builds on 2 of its 28 references that are in the map.
- First posted on arXiv 24 Sep 2026.

## Builds on (most cited first, 2 of 2)

- [Forecasting day-ahead electricity prices: A review of state-of-the-art algorithms, best practices and an open-access benchmark](https://mlsanity.com/paper/2008.08004/) (2020)
- [Reinforcement Learning for Bidding Strategy Optimization in Day-Ahead Energy Market](https://mlsanity.com/paper/2411.16519/) (2024)

## Abstract (arXiv)

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.