The Comisión Nacional de los Mercados y la Competencia (CNMC) has imposed a €6m ($6.2m) fine on GESTERNOVA S.A. and a €1.5m ($1.6m) fine on AXPO IBERIA for manipulating the Spanish electricity market between September 30 and December 30, 2022.
These penalties come under the REMIT Regulation (EU) No 1227/2011, which prohibits market manipulation and seeks to protect the integrity and transparency of the EU’s wholesale energy markets.
The decisions
In its decisions CNMC found that GESTERNOVA S.A. and AXPO IBERIA had breached Article 5 of REMIT by manipulating the continuous intraday market by:
- Giving false or misleading signals regarding the supply of wholesale energy products, through behavior known as “quote stuffing”.
- Issuing (and also withdrawing in AXPO IBERIA’s case) non-genuine orders to be in an advantageous position to execute cross-border sales with France.
CNMC’s investigation revealed that GESTERNOVA S.A. and AXPO IBERIA, in multiple sessions of this period, issued (or also withdrew in AXPO IBERIA’s case) non-genuine sell orders by using algorithmic trading with the goal of monopolising the order book queue for the D+1 product.
Their behavior blocked other market participants’ orders from being accepted in the order queue. Consequently, at the start of the trading session, one or more of GESTERNOVA S.A.’s and AXPO IBERIA’s sell orders were prioritized at the top of the order book, ready to be the first matched once additional capacity would become available at the interconnection with France.
CNMC consider the behavior as “quote stuffing”. This is defined in 6.1st edition of ACER REMIT Guidance as entering a large number of orders to trade and/or cancellations and/or updates to orders to trade so as to create uncertainty for other participants, slowing down their process, and/or to camouflage one’s own strategy.
Integrity of the markets
The fine imposed by the CNMC underscores the regulator’s commitment to maintaining a fair and transparent energy market in Spain. Such penalties serve as a deterrent to market participants who may be tempted to manipulate data or engage in other forms of misconduct.
See also Enérgya VM Gestión de Energía fined €1m for gas market manipulation, where CNMC fined the company for artificially setting the price of gas in trading sessions.
The European Union Agency for the Cooperation of Energy Regulators (ACER) said it welcomes the rigour of CNMC’s enforcement with these third and fourth CNMC market manipulation decisions this year respectively.
Access the GESTERNOVA Decision and AXPO Decision, together with CNMC’s GESTERNOVA press release and AXPO press release (in Spanish).
See the latest table of REMIT breach sanction decisions adopted by national regulatory authorities.
It is thought European regulators will continue to place energy markets under closer scrutiny with the advent of REMIT II. See Energy’s rising importance is matched by regulatory scrutiny and Spotlight on new reporting obligations for energy markets participants.
