Feb. 19 (Bloomberg) -- ICIS asked for comments on its European natural gas pricing methodologies, opening a monthlong consultation following criticism of its approach from a former employee.
Submissions will be accepted through March 15 and public responses will be published by March 22, according to a document on the company’s website dated Feb. 15. A summary of all comments and a decision on any changes to the methodologies will be published March 29.
London-based ICIS, a unit of Reed Elsevier Plc, has been forced to defend its practices after former price reporter Seth Freedman last year accused the company of providing inadequate training to its staff, leaving its pricing mechanisms open to manipulation. ICIS reported what it described as irregular trades to regulators in September. Freedman brought the issue to the attention of the Financial Services Authority in October.
Questions on the consultation document include: “This methodology seeks to provide a reliable measure of physical market value. How well do you think the ICIS methodology achieves this aim?”
ICIS price assessments are formed by a team of journalists who call or e-mail about a dozen traders to collect prices of natural gas for delivery from one day to five years ahead. They gather data on completed deals as well as bids and offers, and then compare those with trades on Trayport Ltd.’s online platform, which aggregates prices from brokers including ICAP Plc and GFI Group Inc., and make their assessments.
Brokers ICAP Plc, Marex Spectron Group Ltd. and Tullett Prebon Plc started a range of indexes Feb. 6 under the name Tankard that use thousands of daily trades they execute every day to derive prices.
Freedman was fired by ICIS Dec. 28 because it was no longer practicable for him to work within the price-reporting team, according to a a letter obtained by Bloomberg News.
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