Prevent, report, and follow up on erroneous orders
Are you a buyer or seller on the wholesale market for electricity or natural gas destined for delivery in the European Union? Or do you conclude contracts for the transport thereof? Making a mistake when placing a trade order can have significant consequences. Prevent erroneous orders and respond properly when they do occur. The Netherlands Authority for Consumers and Markets (ACM) can take enforcement action.
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An erroneous order is placed if, for example, you submit an incorrect price, side of trade (buy/sell), or volume. An erroneous order can unintentionally give a false or misleading signal to the market. This signal can influence the behavior of other market participants as well as the market price.
An erroneous order that sends out a false or misleading signal falls within the legal definition of market manipulation. That is prohibited, even if there is no element of intent. ACM can take enforcement action after an erroneous order. Have you failed to take measures to prevent erroneous orders? Or have you failed to respond properly to a mistake? In that case, ACM will be more inclined to launch an investigation or take enforcement action.
Prevent and detect mistakes
It is up to you to decide what measures to take and what processes to have in place in order to prevent erroneous orders. For example: automatic warning notifications in case of large deviations from previously submitted values. It is important that you detect a mistake on time. ACM may request that you submit your work processes.
Cancel your order and report your mistakes
Have you still placed an erroneous order? In that case, you must limit the consequences of the erroneous order as much as possible. You must cancel the order as quickly as possible, or attempt to reverse the transaction in order to eliminate a possibly false or misleading signal to the market. Find out how to do this on your trading platform and incorporate this in your work process.
In addition, you must inform the market about the erroneous order. Some trading platforms have clear rules on how to do this. Does your trading platform not have a process in place for receiving information on erroneous orders and informing the market? Or does the erroneous order also impact trade outside of the trading platform on which it was placed? In that case, you can place an Urgent Market Message on an Inside Information Platform. Read more about publishing inside information regarding trade in energy (in Dutch).
Reflect and improve your processes
Reflect on how an erroneous order could have been placed and how you responded to this. As a market participant, you are responsible for proper preventative and follow-up processes. Evaluating mistakes is part of those processes and helps improve measures and work processes. Does ACM suspect that you have violated the rules? In that case, ACM can ask you for the relevant information. ACM recommends keeping your knowledge up-to-date with regard to REMIT and erroneous orders.
Questions and contact
Do you have any further questions about REMIT and erroneous orders? Contact us by sending an email to remit [at] acm [punt] nl.
Have you seen suspicious trading activity on the wholesale energy market? File a report with us:
- Report a suspicious energy trade (in Dutch)
Legal framework
- Article 5 of REMIT: prohibition of engagement or an attempt to engage in market manipulation
- Chapters 6.2 and 6.3 of the ACER Guidance: additional information about the prohibition of engagement or an attempt to engage in market manipulation