MARKET SURVEILLANCE NORD POOL SPOT AS

Carl Anders Heilmann Lien

Agenda

Regulatory regime

REMIT

Market Surveillance

Market Conduct Rules Insider trading Disclosure requirements Market Manipulation

Investigations and sanctions

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Regulatory regime

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NVE

Nord Pool Spot AS

Ministry of Oil and Energy

Trading rules

Market Conduct Rules

Cross-border trading license

Marketplace license

REMIT

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Appendix 5: Market Conduct Rules

1. Definitions

2. Specific Market Regulations a. Elspot Market Regulations b. Elbas Market Regulations c. Special Regulations for Trading in the Estonian Electricity Exchange

Area towards Latvia d. Special Regulations for Trading in the Estonian Import area towards

Russia e. Special Regulations for Trading in the Lithuanian Import and Export

Areas towards Belarus f. Special Regulations for Import and Export between Lithuania and

Latvia and between Lithuania and Kaliningrad

3. Product Specifications

4. Clearing Rules

5. Market Conduct Rules

6. Fee Schedule

7. Ethical Guidelines

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REMIT Regulation (EU) no 1227/2011 of the European Parliament and of the

council of 25 October 2011 on wholesale energy market integrity and transparency (REMIT)

Entered into force December 2011 (not implemented in Norway)

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Market Surveillance

Required to have a market surveillance department

Report to Norwegian Water Resources and Energy Directorate (NVE)

REMIT – NPS is obliged to

– Have arrangements in place to identify breaches of the prohibition against market manipulation and of the prohibition against insider trading

– Report possible breaches to the national regulatory authority

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Market Surveillance

Monitors trading activity – Elspot and Elbas – N2EX market

Investigates possible breaches

In order to ensure an efficient market that is attractive to investors it is essential to

– Ensure the independence of employees – Ensure that commercially sensitive information is kept confidential – MS is operated independently from commercial activities of the exchange – Information given to MS is confidential

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Market Surveillance Direct access to information Market data (trading and clearing)

– All orders and trading results from Nord Pool Spot and N2EX

Market Surveillance may request information – From all members – From TSOs

Market Surveillance at NASDAQ OMX Commodities

Fundamental market information

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Market manipulation

Disclosure requirements Insider trading

Prohibition against trading while holding

inside information

Duty to share certain information

with the market

Prohibition against dissemination of misleading information and equivalent

behaviour

The Market Conduct Rules

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Inside Information

..the term “Inside Information” means information of a precise nature which has not been made public, which relates, directly or indirectly, to one or more Products and which, if it were made public, would be likely to significantly affect the prices of those Products

Information regarding the Member's own plans and strategies for trading shall not be considered as Inside Information

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Prohibition against Insider Trading

Members who possess Inside Information in relation to a Product shall be prohibited from: – Using that information by acquiring or disposing of, or by trying

to acquire or dispose of, for their own account or for the account of a third party, either directly or indirectly, Products to which that information relates;

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Disclosure Requirements

Participants have to publish information regarding the following: – Any outage, limitation, expansion or dismantling of capacity

– 100 MW or more for one Generation Unit, Consumption Unit – 100 MW or more for one Production Unit with an installed capacity of 200 MW or more – in the transmission grid that reduce cross zonal capacities by 100 MW or more – In the transmission grid that reduces power feed-in and/or consumption by 100 MW or more

– for the current year and three (3) calendar years forward, including updates of such information;

– Any erroneous or missing Orders in the Elspot market of 200 MW or more; – Any information that is likely to significantly affect the prices of one or more derivatives based on Products if

made public. – Any Inside Information not covered by sub-paragraph (a) to (c) above

All information which shall be publicly disclosed pursuant to this Section 5 shall be publicly disclosed as soon as possible, and no later than 60 minutes after occurrence of the event which leads to the relevant information. Such information shall be publicly disclosed as an Urgent Market Message (UMM)

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Urgent Market Message

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Area

Production Unit

Generation Unit

Available Capacity

Duration

Cause of the event

Occurrence of

information

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Market Manipulation

Transactions or orders – False or misleading signals regarding supply of, demand for or

price of products at NPS – Secures the price at an artificial level

Disseminating information through the media which can give false or misleading signals regarding supply and demand or price of Products

Attempted manipulation is also forbidden

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Good Business Conduct

Orders shall reflect a genuine purchase or sales interest and that all transactions to which the member is a party is genuine

Not improperly influence the price or price structure in the physical markets nor disturb other members access to or participation in the market

Not apply unreasonable business methods

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Report to NVE

Monitoring Investigation of

suspected breach

Further investigation on violation on

laws or regulations

Found breach

Dialogue with market participant

MS makes recommendation for disciplinary sanction

Sanction

Possible breach discovered

Sanction by Nord Pool Spot AS

Board of Directors/ CEO

Sanction

Procedures for disciplinary actions

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Suspects breach REMIT

Report to National regulator

Sanction pursuant to REMIT by national

regulator

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Disciplinary Actions

Non-public warning

Public warning

Violation Charge up to NOK 2,500,000 (two million five hundred thousand)

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Information from MS

UMM

News from MS

Quarterly report – Investigations – News – Sanctions – Statistics – Tips from participants

MCR

Guidelines

Disciplinary actions

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Statistics Investigations from MS

Total 2012 1st quarter 2013

Number of written investigations initiated in the period

127 16

Number of statements of breach issued in the period

50 5

Number of written warnings 0 0

Number of violation charges 0 0

Number of cases sent to authorities 8 2

Number of tips received from members 33 4

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Concluded breaches:

Total 2012 1st quarter 2013

Disclosure requirements

49 5

Market manipulation 0 0

Insider trading 10 0

Contact

Tel +47 67 10 91 35 (this line is recorded) market.surveillance@npspot.com www.nordpoolspot.com

*Correspondance with Market Surveillance is confidential

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