U.K. regulator Ofgem said that it has fined Engie Global Markets (EGM) approximately £2.1 million, "after an investigation found that EGM, acting through a trader working in the name and on behalf of EGM, had manipulated wholesale gas prices to increase trading profits."

In November 2016, a market participant alerted Ofgem to suspicious activity on the wholesale gas market for Great Britain.

Ofgem launched an investigation which found that, "A trader, working for EGM, engaged in ‘spoofing’ to manipulate wholesale gas prices between June and August 2016."

‘Spoofing’ involves manipulating prices by placing bids or offers to trade with no intention of executing those bids or offers in order to buy or sell at a higher or lower price and increase trading profits.

"Ofgem found that a number of bids and offers to trade, concerning a month ahead natural gas contract on the GB wholesale gas market, were in breach of Article 5 of REMIT," Ofgem said

The investigation found no evidence of more widespread market manipulation on the part of EGM.

"Ofgem considers that the company failed to take appropriate measures to prevent or detect the breach from happening. "Whilst Ofgem notes EGM did have some measures in place, they were inadequate at the time to detect and prevent the breaches of REMIT," Ofgem said

EGM fully co-operated with Ofgem’s investigation. Since August 2016, the company has taken measures to help prevent this from happening again by, for example, increasing surveillance of trading activity undertaken on its behalf by its traders to ensure compliance with REMIT. By settling this investigation early, EGM has qualified for a 30 per cent discount for early settlement from the proposed approximate £3 million penalty.

Dermot Nolan, chief executive at Ofgem, said: “This investigation demonstrates Ofgem’s commitment to monitoring wholesale energy markets in Great Britain and ensuring their integrity on behalf of consumers. Ofgem’s enforcement action under REMIT sends a strong signal to all energy market participants that we have the powers to tackle market manipulation wherever we find it -- and are ready to use them.”

Tags:
U.K.   Wholesale   Market manipulation   Trading  

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