Romanian regulator bans OTC electricity trading outside of OPCOM platform

18 September 2012 11:24 Source:ICIS
ICIS_00148538.jpg

Electricity trading in Romania on any platform other than local exchange OPCOM has been banned, according to a letter sent by Romanian regulator ANRE to market participants on Monday and seen by ICIS.

"Wholesale market participants are not entitled to conclude any purchase or sale contracts, or any supplementary clauses to contracts that were concluded at the time when the Law 123/2012 was enforced, on platforms other than centralised screens offered by OPCOM which is currently the only operator licensed by ANRE to carry out such activities," the letter said.

Furthermore, the regulator is asking market participants to produce all records of deals concluded on other platforms apart from OPCOM from when the amendments to the electricity law came into force at the end of July until traders received ANRE's letter.

Participants who fail to provide the regulator with the required records are liable to receive a fine, according to the letter. The letter did not specify whether traders would be fined for having concluded deals outside of the mandatory OPCOM platform. ANRE was not available for further comment at the time of writing.

However, traders have been fearing such fines and some companies have ceased active trading in Romania because of the speculation (see EDEM 7 September 2012).

"The fines might go to as high as 5% from the turnover. That's bankruptcy," one Romanian trader said.

'Kill the market'

Another trader claimed that if participants are hit with fines they will counter with lawsuits.

"This measure will set Romania back by 30-40 years. Things were going so well and now they have decided to kill the market.

"This shows that those who took this decision have never concluded a deal in their whole lives and have no clue about trading. I truly hope for Romania's sake that principles and common sense and not some mean interests will prevail in the end," a third source active on the Romanian market said.

On Friday OPCOM announced its draft plans for a new platform for physically delivered bilateral contracts with delivery periods lasting longer than one year (see EDEM 14 September 2012).

Traders expressed doubt about the transparency of the platform saying the complicated three-stage process could be open to manipulation (see EDEM 14 September 2012).

But OPCOM insisted that the trading platform would be transparent to the entire market.

"The process is indeed a little more complicated but we have to take into consideration that the full auction process is aimed at supporting the transparent awarding of portfolio contracts for long and very long periods", the exchange told ICIS on Monday in a statement. "In order to reach the needed transparency, all the auction stages will be documented and duly published on OPCOM's web-site," it added.

Furthermore, the whole selection process will be based only on public criteria, public data and transparent rules. No unspecified conditions will be considered at the selection stage, the exchange added.

According to OPCOM, market participants have expressed their willingness to participate in the auctions on the new platform through official letters.

Previously, traders suggested that there would be multiple trading platforms, separating consumers, suppliers and trading houses.

But OPCOM stipulated that even though large consumers initiated the design of the platform the final framework proposed will address not only large consumers but also traders, suppliers and producers.

"The market structure will be defined by the regulatory authority," the statement added. At the end of July, the Romanian government approved the conduct of electricity trading in a "centralised manner" but did not define what that would involve or say whether all counterparties - both state generators and private companies - would be covered by the law (see EDEM 19 July 2012).

In a meeting with ANRE on 20 July, traders failed to prise the clarification from the regulator but were told to move all trading activity to the OPCOM exchange until receiving the clarification (see EDEM 20 July 2012). IP/AS

By Irina Peltegova