AFM and NMa: no inexplicable prices on gas trading platform TTF

The Netherlands Authority for the Financial Markets (AFM) and the Netherlands Competition Authority (NMa) have found no indications that behavior of hedge funds and speculators on the Title Transfer Facility (TTF) in the past has led to higher prices or to inexplicable price fluctuations. The TTF is the virtual Dutch trading platform for natural gas traded in the Netherlands. One of the main reasons behind this conclusion is that, according to the AFM and the NMa, speculators and hedge funds are active on the TTF only to a very small degree, because trading on this virtual gas hub is still predominantly ‘physical’. These are the results of the quick scan by the AFM and the NMa that the Ministry of Economic Affairs, Agriculture and Innovation (EL&I) today has sent to the Dutch Senate.

Both regulatory bodies are satisfied with these results, but see reasons to remain vigilant. ‘After all, it cannot be ruled out that, in the future, the TTF may witness transactions with the specific intention to artificially raise gas prices or to keep them high,’ says Jaap de Keijzer, member of the Board of the NMa. René Maatman, member of the Board of the AFM, adds: ‘If trading on the TTF starts having a more financial nature, that risk becomes real.’

The AFM and the NMa carried out the quick scan at the request of the Minister of EL&I after the Dutch Senate in late 2010 expressed its concerns about the role speculators and hedge funds might be playing, and about the effect this may have on prices on the gas market.

The European Commission is currently working on new European rules for improving the energy market’s integrity and transparency. The AFM and the NMa expect that these new rules will enable them to tackle price manipulation and abuse of dominance by market participants.