Nasdaq Passes Nordic Power Market Manipulation Case to Regulator

Nordic power derivative prices may have been manipulated by an unidentified member on three separate instances last year, according to Nasdaq OMX Group Inc.

The exchange’s Market Surveillance unit found evidence of price manipulation from a member who had a dominant market share, and has filed necessary documents to Norway’s Financial Supervisory Authority for further investigations, the exchange said today in an e-mailed statement.

“Orders or transactions that set the closing price were at an abnormal or odd level,” Erik Korsvold, head of market surveillance at the Oslo-based exchange, said today in a separate e-mail. “We are unable to comment further since this is an ongoing investigation.”

The investigation at Nasdaq OMX’s Nordic energy exchange, the world’s largest power derivatives market with more than 330 trading and clearing members in 15 countries, comes as the Federal Energy Regulatory Commission in Washington steps up its drive to combat electricity market manipulation in the U.S. The suspected market member used a technique called marking the close, seeking to profit from distorted closing prices for front and second-to-front quarter contracts, Nasdaq said.

Marking the close means placing quotes or orders near the close of the trading day, and is usually indicated by a series of multiple trades, sliced into smaller parcels, shortly before the market closes. Nordic power market-manipulation rules prohibit such behavior, according to Nasdaq OMX Group’s website.

To contact the reporter on this story: Torsten Fagerholm in Helsinki at tfagerholm@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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