Morgan Stanley & Co. International plc (MSIP) has been slapped with a £5.41 million fine by Ofgem.
The penalty comes as a result of MSIP’s failure to record and retain electronic communications involving wholesale energy trading on WhatsApp between January 2018 and March 2020, the energy regulator has said.
The fine represents the first-ever penalty issued in Britain under regulations that mandate the recording and retention of electronic communications related to trading wholesale energy products.
These rules, known as the REMIT Enforcement Regulations, are meant to safeguard market transparency and integrity while preventing market manipulation and insider trading.
Ofgem’s investigation revealed that MSIP had policies in place prohibiting the use of WhatsApp for trading communications, but the company did not take sufficient steps to ensure adherence to its policies and regulatory requirements.
The breach came to light during Ofgem’s examination of MSIP’s responses to information requests made under the REMIT Enforcement Regulations.
While MSIP acknowledged the breaches spanning from January 2018 to March 2020, it has undertaken corrective actions to prevent such incidents in the future.
These measures include enhanced staff training and bolstered internal systems and controls.
Cathryn Scott, Ofgem’s Regulatory Director of Enforcement and Emerging Issues, said: “This fine sends a strong message to market participants that they must comply with all REMIT rules or face enforcement action.
“It is unacceptable that MSIP failed to prevent electronic communications which could not be recorded or retained. It risks a significant compromise of the integrity and transparency of wholesale energy markets.
“We welcome the steps MSIP has taken to ensure the breaches do not happen again.”
