Nasdaq OMX Passes Power Price Manipulation Case to Regulator

Nasdaq OMX Group Inc. has filed evidence that Nordic power derivative prices may have been manipulated by an unidentified member on three separate instances to Norway’s Financial Supervisory Authority.

The exchange’s Market Surveillance unit sent documents related to the price manipulation last year by a member with a dominant market share to the regulator for further examination, the bourse 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 probe 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.

Nordic power for June-to-September delivery fell 2.8 percent to 35.10 euros ($45.53) a megawatt-hour today on Nasdaq OMX Group’s energy exchange in Oslo. The fourth quarter contract declined 1.3 percent to 40.20 euros.

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