The Energy Markets Inspectorate (Ei), the Swedish energy regulator, published this notice (in Swedish) urging market participants to ensure that they have measures in place to minimize the risk of entering incorrect orders into the market that could cause disruption and, in some cases, be considered market abuse under the REMIT regulation. This guidance announcement was undoubtedly stimulated by the continuing fallout from the Finnish power market fat-finger incident in November 2023 which triggered investigations into both the market participant and the Nord Pool exchange (see here and here).
The short guidance reaffirms existing expectations:
- No intent is required under REMIT to violate the prohibition of market manipulation - this means that if you accidentally place an incorrect trade order, you may be guilty of a violation of REMIT;
- It is important that market participants review procedures and systems to minimise the risk of placing an incorrect trade order;
- If an erroneous order is placed, it is important to inform the market by publishing the correct information as soon as possible on an inside information platform;
- Not disclosing information on erroneous orders may lead to a breach of the obligation to disclose inside information under Article 4 of REMIT and failure to disclose information may put the firm in an insider position and risk a breach of Article 3 of REMIT which prohibits insider trading.
Ei is the latest National Regulatory Authority to positively confirm the expectation that firms must publish an Urgent Market Message (UMM) if a fat-finger order entry is identified. They also make the clear link between such disclosures and the risk of breaching insider trading rules under Article 3 of REMIT.
