The Spanish National Commission of Markets and Competition (CNMC) published today a decision in which it holds that the company Rock Trading World, S.A. (‘Rock Trading World’) manipulated the Spanish gas wholesale market between 3 and 7 November 2018, breaching the EU Regulation on Wholesale Energy Market Integrity and Transparency (REMIT). CNMC has imposed payments amounting to € 60,000.
CNMC found that Rock Trading World engaged in market manipulation, consisting in issuing non-genuine orders and executing transactions involving low volumes on the sell side of the market in order to provide false signals of a downward price trend, so that it could purchase large volumes of gas at lower prices on the within day products traded at Mercado Ibérico del Gas (MIBGAS). Such behaviour was repeated for four days. Furthermore, on 5 November 2018, Rock Trading World also secured the price of the within day products on MIBGAS at an artificial level.
According to CNMC, Rock Trading World’s behaviour was likely to send false or misleading signals to the market as to the price of such gas wholesale energy products and secured the price formation process of the gas wholesale energy products at an artificial level, thus breaching REMIT, which prohibits market manipulation. CNMC’s decision can be subject to an appeal under the Spanish national law.
Rock Trading World’s behaviour is commonly known as “layering”. 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.
This is the fourth decision from a National Regulatory Authority sanctioning an order-based manipulative behaviour of the type “layering and spoofing” on the European wholesale gas markets. It follows two previous decisions from the French Energy Regulatory Commission (CRE), one from December 2019 imposing a € 1 million fine on the company BP Gas Marketing Limited for the same type of behaviour at the French Southern virtual Gas Trading Point (PEG Sud) on 37 days and another from October 2018 imposing a € 5 million fine on the company VITOL S.A. for engaging into a similar type of market manipulation also at the PEG Sud on 54 days. In September 2019, the Great Britain’s Gas and Electricity Markets Authority (Ofgem) also sanctioned for around € 2.3 million a manipulative spoofing occurring during 3 months by the company Engie Global Markets on the UK wholesale gas markets.
The EU Agency for the Cooperation of Energy Regulators (ACER) has followed closely the development of this case and welcomes NRAs taking the initiative to pursue this behaviour across Europe guided by ACER’s Guidance Note on layering and spoofing.
Access the full text of CNMC’s decision here and CNMC’s press release here (Spanish 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.
