Ferdec (News)


December 19th, 2018 Posted by News 0 thoughts on “NORTH AND SOUTH REMIT FINES AND CRIMINAL SANCTIONS”

It has been a busy end to 2018 from a market abuse enforcement perspective with three fines announced over the last few weeks for breaches of Article 5 of REMIT. Two cases occurred in the Iberian gas market and the third in the Nordic power market.


Wednesday, 19th December 2018 – Berlin. In the first two cases, the Spanish National Regulatory Authority, La Comisión Nacional de los Mercados y la Competencia (CNMC), issued €120k and €100k in fines to Multienergía Verde SLU and Galp Gas Natural SA respectively. Both fines relate to alleged manipulation in the MIBGAS short term gas market during January 2017. Both cases involved the accused either buying or selling small volumes of gas at off-market prices in an attempt to set market reference prices at artificial levels by using false and misleading signals.

In the case of Multienergía, the manipulation took place over a number of days and involved a range of products being offered to the market between 24% and 97% below prevailing prices. By creating the impression of a falling market, the Regulator claimed that this resulted in the reference prices of a number products being set at artificially low levels. In the second case, the alleged activity occurred shortly before the market close over the same period where Galp executed a sell transaction(s) followed shortly after with a buy transaction at a significantly higher price (c.7%). The Regulator called into question the economic rationale behind these trades along with the suspicious timing (the last trade took place a few seconds before the close of the session), concluding that it was an attempt by Galp to set the daily reference price at artificial levels.

In the third case, following an investigation by the Danish Utility Regulator (Forsyningstilsynet), the Danish State Prosecutor fined Energi Danmark A/S a total of c.€147k for what was deemed to be a criminal case of Capacity Hoarding in the Norpool intraday power market (Elbas). The activity in question took place across several days in May, June and September 2015, and involved a number of bidding zones in the Nordic and neighboring power markets. The penalty notice describes 10 separate incidents where it is alleged that Energi Danmark’s activity ‘created or was likely to create a price difference between the bidding zones’, and in four cases it appears that there was either a full or partial reversal of Energi Danmark’s positions indicating an intent by Energi Danmark to gain from such price differences. Forsyningstilsynet also noted that a similar case involving another market participant is currently underway, a clear indication that capacity hoarding is an area of focus in the Nordic market.

While further information on these cases will be forthcoming, we note the following high-level takeaways:

    • Economic rationale is once again cited by the Regulator in both cases – ensuring that your traders can articulate their reasons for trading is increasingly important, often long after the trades were executed
    • Firm regulatory precedent is now established for Capacity Hoarding (reinforced by the publication of ACER’s guidelines in March 2018) and effective surveillance for this behaviour should be sought
    • Off-market trading is still a key indicator – your surveillance solution should incorporate this element as part of its analysis layering
    • Small volume trades which are persistently loss making should be considered by your surveillance solution
    • The activities in the Energi Danmark case pre-date the start of the REMIT reporting obligation in October 2015 – now that regulators have many years of trade, order and fundamental data at their disposal, the imperative to detect suspicious activity before they do is arguably far more acute.



FERDEC is a technology and consulting firm dedicated to the creation of innovative solutions for the current and future challenges facing energy and commodity traders drawing on a total of 50+ years of industry, research and software development experience. It is FERDEC’s philosophy to provide top quality software and consultancy solutions to leading companies, with the conviction that superior decision support can make all the difference in highly competitive markets.

About ferdecTS®
ferdecTS® is our flagship product and is recognised as a market leading, fully integrated transaction surveillance solution with a leading-edge data analytics engine designed specifically for energy and commodity markets. ferdecTS® ingests and processes information from multiple sources (incl. ETRM systems, Broker and Exchange platforms, market information systems, inside information publication sources etc.) to identify suspicious trading activities and supports the full MAR compliance lifecycle.

For more information please contact:
Christian Endter, Managing Director / christian.endter@ferdec.com / Tel: +49 151 1132 0535


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