Engie Global Markets has been fined £2.1 million by Ofgem after one its traders was found to have engaged in “spoofing” to manipulate wholesale gas prices and increase profits over a three-month period between June and August 2016.
Spoofing refers to the practice of placing bids or offers with no intention of executing them.
Ofgem launched an investigation after a market participant alerted it to suspicious activity on the whole market in November 2016.
The regulator found that a number of bids and offers for month-ahead gas contracts were in breach of Article 5 of the EU’s Regulation on Wholesale Energy Market Integrity and Transparency (REMIT).
It found no evidence of more widespread market manipulation on the part of Engie Global Markets (EGM).
However, the regulator said the company failed to take appropriate measures to prevent or detect the breach. Those it did have were inadequate at the time.
Ofgem said the firm has fully cooperated with its investigation and since August 2016 has taken steps to prevent this happening again, for example, by increasing surveillance of its traders’ activities.
By settling the investigation early, the company has qualified for a 30 per cent discount from the proposed penalty of roughly £3 million.
Ofgem chief executive Dermot Nolan 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.”
Engie said in a statement: “EGM fully cooperated with Ofgem throughout its investigation and provided authorities with any relevant information they required.
“EGM operates with the highest standards of risk control, ethics and compliance, and therefore strongly condemns practices that distort the market.
“The company immediately undertook measures to ensure that such practices are detected and not repeated again by reinforcing the implementation of its existing supervising tools which guarantee a constant and rigorous follow-up and audit of energy trading activities.”