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UK regulator fines Engie unit £2.1M for manipulating gas prices

U.K. regulator Ofgem fined ENGIE Global Markets SAS approximately £2.1 million after determining that a trader working on the company's behalf manipulated British wholesale gas prices in 2016.

According to a Sept. 5 news release, the trader engaged in "spoofing" on Great Britain's wholesale gas market between June and August 2016. The term "spoofing" refers to manipulating prices by placing bids or offers to trade with no intention of executing the trades, but in order to buy or sell at higher prices and increase trading profits.

Ofgem launched an investigation after being alerted to the suspicious activity by a market participant in November 2016. The U.K. regulator found that multiple bids and offers to trade were in breach of Article 5 of REMIT, which gives energy regulators greater powers to protect wholesale markets.

While Ofgem noted EGM did have measures in place to prevent this type of market manipulation, they were "inadequate" to detect and prevent the REMIT breaches, the regulator said.

The Engie SA subsidiary fully cooperated with Ofgem's investigation and qualified for a 30% discount for early settlement from the proposed approximate £3 million penalty, according to the news release. The company also took measures to prevent such an incident from happening again, including increasing surveillance of trading activity.

"This investigation demonstrates Ofgem's commitment to monitoring wholesale energy markets in Great Britain and ensuring their integrity on behalf of consumers," Ofgem CEO Dermot Nolan said.