In its decision, published today, Great Britain’s Gas and Electricity Markets Authority (OFGEM) found that Engie Global Markets (EGM) engaged in market manipulation, over a three-month period, in relation to the month ahead contract for the delivery of natural gas at the National Balancing Point (NBP) on the over-the-counter wholesale energy market. This breach of the EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT) was sanctioned with a penalty of 2,128,236 GBP, around 2.3 million euros.
OFGEM established that a trader working for EGM engaged in ‘spoofing’ to manipulate wholesale gas prices between 1st June 2016 and 31st August 2016, in particular by placing bids or offers to trade with no intention of executing them in order to buy or sell at a higher or lower price and increase trading profits. OFGEM concluded that these bids and offers to trade were in breach of Article 5 of REMIT and that they gave, or were likely to give, false or misleading signals as to the supply of, or demand for, or the price of wholesale energy products or that secured or were likely to secure the price of wholesale energy products at an artificial level.
OFGEM considered EGM liable for the behaviour and concluded that EGM failed to take appropriate measures to prevent the breach from happening. Whilst OFGEM noted that EGM did have some measures in place, it considered that they were inadequate at the time to detect and prevent the breaches of REMIT.
The European Union Agency for the Cooperation of Energy Regulators (ACER) welcomes effective oversight of wholesale energy trading and highlights that this decision is the first to impose a penalty within the framework of REMIT in the UK.
The ACER Guidance Note on layering and spoofing provides examples of the various types of trading practices which could constitute market manipulation under REMIT, for example, 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.
For further information on OFGEM decision see here.
More information on spoofing behaviour can be found in the ACER Guidance Note here.
