The Authority Consumer & Market (ACM) has slammed an international company in the wholesale gas market for possible market manipulation in the form of 'marking the close'. This major player in the wholesale market has pledged not to show this trading behavior again. The ACM will continue to monitor this closely in the coming period.
The Dutch wholesale gas market (TTF) is by far the largest in Europe. Three times more gas is traded on this trading platform than on all other European gas markets combined. Trading on the Dutch TTF has a major impact on energy prices paid by consumers and companies in the Netherlands and in other European countries. That is why the ACM ensures that traders on the TTF comply with European rules. These rules are laid down in the European REMIT Regulation. Market manipulation is a serious offense because it can lead to higher prices for consumers and businesses.
'Marking the close'
On the TTF Day Ahead market, natural gas is traded throughout the day with delivery one day ahead. At the end of each day, a reference price is set based on the then-current market price, against which many gas contracts are settled for next-day delivery. A commonly used one is the TTF Heren Day Ahead which is set exactly at 17:30:00 each day. This price is also an important reference for gas prices in other EU countries.
'Marking the close' is prohibited trading behavior whereby a market participant influences the reference price on a wholesale energy market by buying or selling close to when the closing price is set. This can be done by offering orders with a much higher asking price just before the market closes or by buying excessive volumes just before the market closes, causing the price to skyrocket. The market participant makes a profit because contracts it has previously entered into are settled at this closing price. As a result, other traders and Dutch and European energy users bear the cost.
Source: ACM