On 19 September, FIA submitted a response to the Ofgem Secure and Promote Review Consultation Paper published on 25 July 2017. The consultation explores the impact of the Secure and Promote licence condition on liquidity in the market and if further changes are required to the license condition.
FIA’s response to Ofgem, the regulator for gas and electricity markets in Great Britain, highlights a lack of evidence that the liquidity windows have promoted greater access to non-standardised products. Although it is recognised that the Supplier Market Access Rules to some extent resolve the issue for smaller market participants. FIA members identify Financial Power Swaps as an instrument that should be included in Ofgem’s assessment of liquidity. Furthermore, we suggest that Ofgem consider:
- Making changes to the MMO ahead of the expected seasonal rise in volatility;
- A reduction in the Fast Market Rule threshold; and
- Varying the levels of MMO depending on market conditions to ensure continued flexibility of the obligations.
Finally, it is recognised that the market has changed dramatically since the introduction of the Secure and Promote special license condition. For this reason, members encourage Ofgem to conduct a review of the policy to assess its validity.
The full response can be found here.