FERC Issues Guidance on Effective Compliance and Market Manipulation
FERC staff recently released two white papers, Anti-Market Manipulation Enforcement Efforts Ten Years after EPAct and Effective Energy Trading Compliance Practices. Both provided compliance guidelines in two areas: market manipulation and trading compliance.
The first of the white papers gave an overview of recent case law concerning FERC’s anti-manipulation regime, identifying what factors result in cases against organizations.
The second provided guidance on trading compliance, suggesting ways in which to develop an effective trading compliance program. While the paper was meant for energy traders, it has important implications for other trading situations as well. FERC recommends incentivizing compliance performance by incorporating it into traders’ compensation structures. They also identify “ineffective” compliance measures, such as overly standardized annual trainings or lack of practical application examples during training.
These new white papers are meant to supplement penalty guidelines issued by FERC in 2010. While implementation of the specific recommendations in these documents is not required to receive compliance credit, the issuance of this new guidance makes it likely that organizations will be expected to meet most of the measures suggested.