* Loss-making trades may constitute manipulation -ACER
* But regulators need EU to implement laws to move - ACER
* National governments also have to implement rules
By Oleg Vukmanovic and Henning Gloystein
LONDON, Nov 9 Europe's energy market regulator
said it may take a recent U.S. case against Barclays as
a precedent to move against the practice of loss-leading trading
in its own rules against market abuse.
Reuters reported earlier in November that dealers on
Europe's energy market commonly trade coal, gas or power at a
loss to push up profits on futures prices.
Uneconomic or loss-leading trades are explicitly banned in
the United States, where British bank Barclays has been accused
of using them to rig California's electricity prices, and the
bank now faces a fine of $470 million.
In Europe, the law is not so clear. Unlike in the United
States, the existing rules do not specify that such trading is
illegal, and this means they are open to interpretation.
"Loss-making trades in physical commodity markets in order
to profit from derivatives positions may artificially cause
prices to be at a level not justified by market forces and may
therefore constitute market manipulation," ACER said on Friday
in an emailed response to a Reuters query.
"The agency therefore considers the case practice of (U.S.
regulator) FERC relevant for the application of REMIT."
The European Union adopted new rules on wholesale energy
trading at the end of 2011 under the Regulation of Wholesale
Energy Market Integrity and Transparency (REMIT).
But ACER said that it needs to wait for the European
Commission and individual states to implement regulation to
enforce REMIT before it can take action.
"The basis for ACER's market monitoring will be the data
collection according to Article 8 of REMIT, which is, however,
dependent on the Commission's implementing acts which still have
to be developed by the Commission and are unlikely to be adopted
before sometime next year," ACER said.
A Commission spokesman said that it had put forward
proposals to further tighten the rules.
Because ACER cannot act on its own behalf under the REMIT
rules but can only urge national regulators to interfere, ACER
said action could only be taken once national governments had
implemented European law.
"As soon as penalties are implemented into national law,
breaches of the market abuse prohibitions of REMIT can be fined
by national regulatory authorities," ACER said.