Nordic power losses blow to world’s oldest market

Bloomberg

A big trading scandal was the last thing Nasdaq Inc.’s Nordic power market needed.
Once the kingpin of European electricity trading, activity on the world’s oldest power market is languishing at its lowest level since 1999 after some of the biggest banks, hedge funds and industrial consumers deserted the market as tougher regulation made buying and selling too expensive and prices that were little changed for years.
Now, remaining members will have to pitch in to cover the losses of Einar Aas, historically one of the most successful traders, who was barred by the exchange this week after causing the biggest default since Nasdaq bought the market back in 2010.
Household names still active in the market range from Glencore Plc to Citigroup Inc. and Citadel Energy Investments Ltd. to the Nordic region’s biggest utilities Vattenfall AB and Fortum Oyj.
“It is sad to hear about it. And it is one big trader less,” Hermund Ulstein, chairman of the Nordic Association of Electricity Traders, said
by phone. The market now will have to move on without “Einar from Grimstad,” he said, referring to the small town in southern Norway which has benefited from the nation’s biggest tax payer in 2016.
Aas, active in the market for about two decades, had taken on a position that was too big in relation to the liquidity in the market, he said in a statement to Dagens Naeringsliv. After “extraordinary price changes” in the Nordic and German contracts, he was forced to pay the exchange his last free liquid funds.
That wasn’t enough and on Tuesday he was put under administration by the exchange. His portfolio was liquidated on Wednesday night.