Notice Re: Investigation/TPG (November)

November 25, 2005

 

NOTICE TO: MARKET PARTICIPANTS

Re: Investigation/Trading Practices Guideline (TPG)

Investigation
In accordance with its mandate under the Alberta Electric Utilities Act (Act) and its MSA Investigation Process and Assessment Guidelines, the Market Surveillance Administrator (MSA) has commenced an investigation into certain trading activity affecting the Alberta electricity market(s) during November, 2005.  The investigation is focused on the conduct of one market participant organization.

Background
The MSA has a broad mandate of surveillance and investigation around all aspects of the province’s electricity markets, and seeks to ensure the fair, efficient and openly competitive operation of the market.  As part of its mandate, the MSA may establish guidelines in furtherance of the market.  In this regard, the MSA published its “Trading Practices Guideline” (“TPG”) in February, 2004, concerning the use of asset outage information for trading.  The TPG is as follows:

Market participants must not trade on the basis of known but not public information about the status of supply, load or transmission assets that can reasonably be expected to have a material impact on market price. Trading shall be understood to include any type of financial or physical transaction or operational strategy designed to extract value from known but not public information about the status of supply, load, or transmission assets.

In the view of the MSA, the potential for trading on outage information that is not in the public domain creates the perception and/or reality of unfairness in the market.  It is akin to insider trading in the securities markets.  Such conduct therefore negatively impacts the fair, efficient and openly competitive operation of the market.  The TPG was established to clearly set out the view of the MSA in this regard.

Reference materials relevant to the TPG, and relevant to this investigation in general, can be found on the MSA website (http://www.albertamsa.ca/TradingPracticesGuidelinesandInformationDisclosureProcedure.html).

Next Steps
The MSA will provide further information about these matters at the conclusion of the investigation, in accordance with its mandate.

Yours truly,

“Original signed”

W.W. (Wayne) Silk
Vice-President, Chief Operating Officer
Market Surveillance Administrator.