Ofgem has fined Engie Global Markets (EGM) £2.1 million because one of its traders manipulated wholesale gas prices to increase profits.
In November 2016, a market participant alerted Ofgem to suspicious activity on GB’s wholesale gas market. The regulator found that a trader working in the name and on behalf of EGM had engaged in ‘spoofing’ over a three month period between June and August 2016. In ‘spoofing’, a trader places bids or offers to trade with no intention of carrying the trade out, in order to affect the price and increase 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 which outlaws the practice.
The investigation found no evidence of more widespread market manipulation on the part of EGM. But Ofgem considers that the company failed to take appropriate measures to prevent or detect the breach from happening. EGM did have some measures in place, but they were inadequate.
Since August 2016, the company has increased surveillance of trading activity undertaken on its behalf by its traders. By settling the investigation early, EGM qualified for a 30% discount for early settlement from the proposed £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.”
The investigation found no evidence of more widespread market manipulation on the part of EGM.