Over-the-counter (OTC) trading in Romania remains in limbo after the regulator failed to clarify controversial amendments to the country's electricity law on Friday.
Traders active on the Romanian market met officials from energy watchdog ANRE on Friday morning, hoping to get a clearer understanding of the latest stipulations requiring counterparties to trade on a centralised platform.
Under the amendments published in the official gazette on Monday, electricity trading will be carried out "in a centralised manner," but the text does not define what this would involve, and whether all counterparties - both state generators and private companies - are covered by the law (see EDEM 19 July 2012)
"We were hoping to get some clarification from ANRE what the law actually expects from us, but we are still very confused," a trader active on the Romanian market said shortly after the meeting.
He said the regulator had instructed them to move all trading activity to the exchange OPCOM until further clarifications.
Another source pointed out that trading on OTC platforms had ground to a halt, but added that some counterparties may be interested in carrying on trading OTC as usual. "What can they do? The law does not stipulate any penalties for the time being, so some are optimistic."
The regulator could not be reached for comment as ICIS went to press.
The Romanian electricity market has been almost frozen by the government's shock announcement that all trade must be centralised, effective immediately, traders said on Friday.
Uncertainty over the law - which has only been published in "primary" form, with "secondary" details to follow at an unknown future date - has sapped liquidity from the market, as participants struggle to establish the legality of continuing to manage their positions on an OTC basis.
One Romanian trader said he was told by the regulator on Friday to only trade on a centralised basis, as the new law states, adding that he is awaiting advice from his company's lawyers before he trades OTC again.
"We had discussions and the truth is, besides the ones that drafted the law and approved it, all the other authorities are quite puzzled and the regulator doesn't have a clear picture of how it will apply. They said don't trade unless it's centralised," the trader said.
A second trader also counted himself out of the market for the time being.
"I'm quite worried about it because we have to close some positions, so I hope in a few days we will know how to trade. I don't risk it now because we don't know if we're allowed to do it," the second trader said.
The uncertainties plaguing the market this week are likely to continue for some time, a third added.
"The law is not very specific and it leaves room for a lot of interpretation, until we have some secondary legislation. That could be six months and according to my experience with ANRE and all the other authorities, it will probably be longer than six months. But yesterday I traded on TFS. We're just doing our jobs," the third trader said. AS/VF