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In its decision, published on 16 January 2020, the Dispute Settlement and Sanctions Committee (CoRDiS) of the French Energy Regulatory Commission (CRE) held that the company BP Gas Marketing Limited (BPGM) engaged in market manipulation on the French Southern virtual Gas Trading Point (PEG Sud) between 1st October 2013 and 1st March 2014, breaching the EU Regulation on wholesale energy market integrity and transparency (REMIT).
CoRDiS found that BPGM engaged, over the course of 56 instances spread over 37 trading days, in market manipulation consisting in a combination of trading behaviours including:
- Layering a minimum of three sell orders throughout the trading day while placing iceberg orders hiding important volumes on the buy side of the order book;
- Back-and-forth transactions within a short period of time that do not seem to follow a rational economical background;
- Large cancellation or price lag of its sell orders (placing orders at a price far from the bid/ask spread to avoid their execution).
According to CoRDiS, BPGM’s behaviour was likely to send false or misleading signals to the market as to the supply and demand, thus breaching Article 5 of REMIT which prohibits market manipulation. CoRDiS’ decision can be subject to an appeal under the French national law.
Mr Christian Zinglersen, Director of the European Union Agency for the Cooperation of Energy Regulators (ACER), welcomes this third decision from a National Regulatory Authority sanctioning an order-based manipulative behaviour of the type “layering/spoofing”. This decision follows a previous CoRDiS decision from October 2018 imposing a € 5 million fine on the company VITOL S.A. for engaging in a similar type of market manipulation on the PEG Sud. In September 2019, the Great Britain’s Gas and Electricity Markets Authority (Ofgem) also sanctioned a manipulative spoofing by the company Engie Global Markets for around € 2.3 million.
On 22 March 2019, ACER published a Guidance Note on Layering and Spoofing, trading behaviours that consist in issuing a single large or multiple non-genuine orders to trade on one side of the order book, in order to enter into one or multiple transactions on the other side of the order book. The Guidance Note on Layering and Spoofing can be found here.
Access the full text of CoRDiS’s decision and CoRDiS’s press release here (French language).
The ACER Guidance provides other examples of the types of trading practices which could constitute market manipulation under REMIT and can be accessed here.
