On 5 October 2018, the Dispute Settlement and Sanctions Committee (CoRDiS) of French Regulatory Commission (CRE) fined VITOL S.A. €5 million for engaging in market manipulation on the French Southern virtual Gas Trading Point (PEG Sud) between 1 June 2013 and 31 March 2014.
The EU Agency for the Cooperation of Energy Regulators (ACER) has said that this decision is the first to impose a penalty within the framework of the REMIT Regulation in the gas sector.
In its decision dated 5 October 2018, the CoRDiS held that VITOL S.A. had engaged in market manipulations on PEG Sud, in breach of Article 5 of the REMIT Regulation.
The CoRDiS found that VITOL S.A. carried out, over the course of 65 cases spread over 54 trading days a modus operandi consisting of the following steps:
- VITOL S.A. would issue multiple sell orders, generally at the beginning of the trading day (especially before 3 p.m.), when liquidity was low. As the day moves along, VITOL S.A. would issue sell orders at gradually decreasing prices. These sell orders would then decrease after 4 a.m. during the more liquid period of the day;
- Once prices had decreased, VITOL S.A. would engage in important purchases; and
- After having proceeded with those purchases, VITOL S.A. would cancel its sell orders to finish the day as a net buyer.
VITOL S.A.’s modus operandi was, on the one hand, likely to give the market misleading signals as to the supply or demand on the PEG Sud and, on the other hand, in the absence of any counter evidence from VITOL S.A., this behaviour did not follow a rational economic logic.
The CoRDiS decided to impose a €5 million fine on VITOL S.A. for having engaged in market manipulations on the PEG Sud between 1 June 2013 and 31 March 2014.
The ACER guidance on the application of REMIT provides examples of the various types of trading practices, which could constitute market manipulation, for example by placing orders with no intention of executing them.
The ACER Guidance provides examples of the various types of trading practices, which could constitute market manipulation, for example by placing of orders with no intention of executing them. For detecting these types of behaviour effective market monitoring of EU wholesale energy markets plays a key role and ensures confidence in market outcomes for the benefit of EU energy consumers.
The decision coincides with the third anniversary of the entry into application, on 7 October 2015, of the trade reporting obligations and the successful establishment of a data collection framework by ACER under REMIT.