- The Gas and Electricity Markets Authority (“the Authority”) takes breaches of REMIT and breaches of the REMIT Enforcement Regulations very seriously.
- The Authority is satisfied that Morgan Stanley & Co. International plc of 25 Cabot Square, Canary Wharf, London, E14 4QA incorporated and registered in England and Wales with company number 02068222 (“MSIP”) has breached Regulation 8(6) and Regulation 8(3) of the REMIT Enforcement Regulations from 1 January 2018 until 31 March 2020.
- “REMIT” is Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency and is retained in UK law by effect of the European Union (Withdrawal) Act 2018 and amended by the Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019 (SI 2019/534).
- The Electricity and Gas (Market Integrity and Transparency) (Enforcement etc.) Regulations 2013 (“the REMIT Enforcement Regulations”) provide the Authority with the powers to sanction any failure to comply with REMIT requirements, and any failure to comply with a requirement of Regulation 8 of the REMIT Enforcement Regulations.
- Compliance with the requirements of Regulation 8 of the REMIT Enforcement Regulations, which includes the obligation on Relevant Persons to record and retain relevant communications, as defined by Regulation 8(2) in the REMIT Enforcement Regulations (“Relevant Communications”)1, is critical to ensuring that the Authority is able to fully investigate and enforce any failure to comply with REMIT requirements. This is essential to ensuring that energy consumers and wholesale energy market participants have confidence in the integrity of the market.
- The Authority has found that MSIP breached Regulation 8 of the REMIT Enforcement Regulations because it failed to take reasonable steps, in accordance with Regulation 8(6) of the REMIT Enforcement Regulations, to prevent the making, sending or receiving of any Relevant Communications, in this case WhatsApp instant messages, that it could not ensure were recorded and retained, and by failing to take reasonable steps to ensure that any Relevant Communications were recorded and retained in accordance with Regulation 8(3) of the REMIT Enforcement Regulations.
- The Authority finds that by the end of March 2020 MSIP was no longer in breach of Regulation 8. The steps MSIP took to remedy its non-compliance included: providing training to employees which reinforced the prohibition on the use of WhatsApp; taking internal action over the use of WhatsApp by employees; and launching an internal investigation into the use of WhatsApp and other non-Company approved messaging systems.
- In these circumstances, and mindful of its duty to monitor the integrity and transparency of wholesale energy market, the Authority has considered it appropriate to impose a financial penalty of £7,730,213 on MSIP in respect of its breach of Regulation 8 of the REMIT Enforcement Regulations.
- Recognising that MSIP has admitted it breached Regulation 8 of the REMIT Enforcement Regulations and has agreed to settle this matter during the settlement window, the Authority has discounted the penalty by 30% in accordance with its REMIT Penalties Statement published on 23 June 2015. Accordingly, the penalty is reduced to £5,411,149.
Dated: 17 August 2023
Gas and Electricity Markets Authority
1 Regulation 8(2) of the Enforcement Regulations defines a relevant communication as “any telephone or electronic communication made for the direct or indirect purpose of entering into any transaction in wholesale energy products.”
