WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke said Thursday that banks’ overly tight lending standards may be holding back the U.S. economy by preventing creditworthy borrowers from buying homes.
Some tightening of credit standards was needed after the 2008 financial crisis, but “the pendulum has swung too far the other way.” Bernanke said. Qualified borrowers are being prevented from getting home loans, he said during a speech to the Operation HOPE Global Financial Dignity Summit in Atlanta.
Operation HOPE is a non-profit organization that provides free economic education and financial counseling to lower- and middle-income Americans.
Bernanke’s comments came on a day when mortgage buyer Freddie Mac said the average rate on the 30-year fixed mortgage fell to a record low of 3.34 percent. Rates have been low all year but have fallen further since the Federal Reserve started buying mortgage bonds in September to encourage more borrowing and spending.
The rates have helped boost home sales and have led more people to refinance existing loans. Yet many have been unable to take advantage of the low rates because banks now require higher credit scores, stricter income documentation and larger down payments before approving loans.
The Fed has tried to make home-buying more affordable through its bond purchases. Minutes from the central bank’s October meeting released on Wednesday indicated the Fed may pursue more bond purchases in the month ahead. A new program could be announced when the Fed next meets on Dec. 11-12.
In his speech, Bernanke gave no hint of what future moves the Fed might take. But he said officials at the central bank understood the problems still facing the U.S. economy.
Bernanke said the housing has shown signs of recovery this year. But he said construction activity, sales and prices remain much lower than they were before the crisis. About 20 percent of mortgage borrowers remain underwater, meaning that they owe more on their mortgage than their home is worth, he noted.
Bernanke said that the Fed and other regulators would continue to pursue efforts to make credit more available to potential home buyers.
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Associated Press Writer Michael Biesecker in Atlanta contributed to this report.
PARIS (AP) — France‘s president called Thursday for stepped-up talks between Mali’s government and any leaders from its breakaway north “who reject terrorism,” even as African nations geared up for a possible military operation against Islamic extremists there.
President Francois Hollande‘s comments suggested a growing openness to dialogue with the extremists, but he remained committed to supporting the military planning effort.
Northern Mali fell to Islamic extremists in April, after coup leaders toppled the government in Bamako, Mali‘s capital. Fearing that northern Mali could become the latest hotbed of terrorism, France has been a driving force in international efforts to bolster Mali’s army to drive the Islamists from power.
Hollande spoke with interim Mali President Dioncounda Traore by phone on Thursday, partly to detail European efforts to help strengthen Mali’s army.
In recent days, representatives from the most moderate of three al-Qaida-linked groups that control northern Mali have been meeting with Burkina Faso‘s president, appointed as a mediator.
“France reiterates its wish that political dialogue will intensify between Malian authorities and representatives of northern populations who reject terrorism,” Hollande’s office said in a statement. “The acceleration of this dialogue must accompany the progress in African military-planning efforts.”
Earlier this week, the African Union approved a plan that calls for 3,300 African troops to be deployed in order to win back Mali’s north. European countries including France and Germany have expressed a willingness to provide military trainers and logistics support, but have stopped short of committing combat troops.
France, like many European countries, fears that the arid, northern Sahel region of Mali could become a breeding ground for terrorism, where al-Qaida and its allies could plot hostage-takings and attacks in Europe or beyond.
France has millions of people whose families hail from former French colonies in north and west Africa. Authorities have long been concerned that French-born militants could travel abroad for terrorism training and return home later to possibly carry out attacks.
French authorities are already investigating two French citizens who were arrested in Mali and neighboring Niger and are suspected of seeking to join up with the al-Qaida-linked extremists, a judicial official told The Associated Press.
Ibrahim Ouattara, a 24-year-old native of the northern Paris suburb of Aubervilliers who has dual French and Malian nationality, was arrested inside Mali this month and remains in custody there, the official said.
Separately, a 27-year-old Frenchman was arrested in August in Niger and has since been handed over to authorities in France, the official said, speaking on condition of anonymity because she was not authorized to discuss terrorism cases publicly.
NEW YORK (AP) — Facebook‘s stock is up more than 7 percent despite expectations that it would fall because more than 850 million additional shares in the company are being freed up for sale.
Shares of Facebook Inc. are up $ 1.48, or 7.5 percent, at $ 21.34. Facebook went public in May at $ 38 in a much-hyped initial public offering of stock that turned out to be a letdown for investors. Its stock price hasn’t hit $ 38 since.
Wednesday marked the expiration of Facebook’s biggest lock-up period, which is a time following an IPO that prevents insiders from selling stock. In all, 773 million shares became eligible for sale, along with 31 million restricted stock units. And about 48 million shares held by former Facebook employees also became eligible for sale, bringing the total to 852 million. These shares would be on top of what’s already been available for trading, increasing the supply and potentially lowering the overall price.
Lock-ups are common after initial public stock offerings and are designed to prevent a stock from experiencing the kind of volatility that might occur if too many shareholders decide to sell all at once.
The previous lock-up expired on Oct. 29, when U.S. stock markets were closed because of Superstorm Sandy. Facebook’s stock fell nearly 4 percent two days later, when the stock market reopened.
Cantor Fitzgerald analyst Youssef Squali believes a potential increase in the capital gains tax on Jan. 1, when Bush-era tax cuts would expire unless Congress acts, could pressure Facebook’s stock. That said, he called the Menlo Park, Calif.-based social media company a “long-term winner.”
Facebook’s stock saw its biggest one-day gain on Oct. 24, the day after the company reported stronger-than-expected third-quarter results and detailed for the first time how much money it made from mobile ads. The stock, which added 19 percent that day, closed at $ 23.23. Even with Wednesday’s gain, it is still 8 percent below that price.
GENEVA (Reuters) – An Asian collector bought a platinum chronograph Patek Philippe wristwatch owned by British rock guitarist Eric Clapton for 3.44 million Swiss francs ($ 3.63 million) at auction on Monday, Christie’s said.
The “ultra-rare” reference 2499/100 by the Swiss luxury watchmaker, one of only two cased in platinum, was acquired by Clapton some 10 years ago, it said.
It fetched a combined hammer price and commission that was in line with Christie’s pre-sale estimate of 2.5-4.0 million francs while also setting a world record price for this reference at auction, it said in a statement on its semi-annual Geneva sale.
“The Eric Clapton watch was bought by an Asian private collector,” Christie’s spokesman Cristiano de Lorenzo told Reuters, adding that the buyer had been in the room.
But the top lot at the seven-hour sale was another platinum chronograph Patek Philippe, reference 2458, made in 1952 for legendary American collector J.B. Champion. It fetched nearly 3.78 million Swiss francs and set a world record for a watch without complications, or features beyond the display of hours, minutes and seconds, it said.
Precious Time, an investment watch fund launched by Luxembourg-based Elite Advisers, was the buyer, Christie’s said in a statement.
In all, 96 percent of the 315 lots on offer found new owners, netting 27.04 million Swiss francs ($ 28.52 million), the auction house owned by French billionaire Francois Pinault said.
Clapton’s Patek Philippe, made in the Swiss city in 1987, has a perpetual calendar with moon phases, as well as windows for day and month and dials for seconds and minutes.
Most experts would rank it among the world’s 10 most significant wristwatches that stand out for historical importance, mechanical complexity, beauty, original condition, rarity and superior provenance, Aurel Bacs, international head of Christie’s watch department, said before conducting the sale.
Clapton, the former Cream musician, last year sold more than 70 of his guitars at a charity auction in New York, raising $ 2.15 million for the Crossroads Centre drug and alcohol rehabilitation centre that he founded in Antigua.
Last month in London he sold an abstract painting by German artist Gerhard Richter at rival Sotheby’s for $ 34.2 million, setting a new record for the price paid at auction for the work of a living artist.
Antiquorum’s sale of modern and vintage timepieces, held in Geneva on Sunday evening, netted 8.63 million Swiss francs ($ 9.10 million) for 485 lots sold out of 613 on offer, it said in a statement issued on Monday,
The top lot was a Rolex Single Red Prototype, known as the Sea Dweller Submariner, one of only six produced in 1967 for use by divers. It sold for 490,900 Swiss francs — four time its pre-sale estimate – in its first appearance at auction.
“It is the highest price ever paid for a Rolex sport watch and for a Sea Dweller,” Antiquorum said.
($ 1 = 0.9482 Swiss francs)
(Reporting by Stephanie Nebehay; editing by Patricia Reaney)
(Reuters) – European regulators have approved the first in a new class of diabetes medicines that work independently of insulin to control blood sugar, the drug’s developers Bristol-Myers Squibb Co and AstraZeneca Plc said on Wednesday.
The approval of Forxiga by the European Commission stands in stark contrast to the rejection of the drug in January by U.S. regulators, who cited concerns about the risk of cancer and liver injury and asked for more clinical data on the once-daily tablets.
The European Medicines Agency in April said it was satisfied those issues had been addressed in the drug’s product label and via a risk management plan for the medicine. But many industry analysts believe the drug’s dim prospects in the larger U.S. market will sharply curtail its potential sales.
The European Commission on Wednesday approved Forxiga, which works by blocking a protein called SGLT2, or sodium-glucose cotransporter 2. It is meant to be used in combination with other treatments for type 2 diabetes, including insulin, or as a standalone treatment for patients who cannot tolerate the widely used oral treatment metformin.
Bristol-Myers and AstraZeneca said Forxiga in clinical trials was associated with a low risk of hypoglycemia, a side effect of many diabetes drugs in which blood sugar drops to levels that cause fainting and other dangerous complications.
Use of the drug in clinical trials was also associated with weight loss and declines in systolic blood pressure.
Johnson & Johnson is awaiting approval of its own SGLT2 inhibitor, canagliflozin. Like Forxiga, it blocks reabsorption of glucose by the kidney and increases glucose excretion in the urine to lower blood sugar, and is also associated with drops in body weight and blood pressure.
Shares of Bristol-Myers slipped 0.8 percent to $ 31.60, while AstraZeneca fell 0.6 percent, both on the New York Stock Exchange, amid similar declines for the broad stock market.
(Reporting By Ransdell Pierson; Editing by Tim Dobbyn)
Kmart, the discounting pioneer owned by Sears Holdings (SHLD), is in the throes of a mass shutdown of stores. After a bad 2011 Christmas, Sears Holdings said it would close up to 120 Sears and Kmart locations; as of January, there were just over 1,300 Kmarts in the U.S. and territories, 800 fewer than a decade earlier, when Kmart slid into bankruptcy as an independent company. In February, the parent posted its biggest quarterly loss in at least nine years. It lost $ 132 million in the July quarter, and analysts expect another loss, on a 10 percent drop in sales, when the company reports on Thursday.
Today, as Amazon (AMZN) wallops all of retail, discounting’s old Big Three has been duopolized down to Wal-Mart (WMT) vs. Target (TGT). According to Bloomberg Industries, department stores now make up less than half the share of the retail industry’s core “general merchandise, apparel and accessories, furniture and other” sales than they did 20 years ago. As for the subject of 30 years ago, that’s when Kmart’s rights to Charlie’s Angel Jaclyn Smith’s clothing line (it still exists) might have been worth something.
It must be asked: Are Black Fridays numbered for the Blue Light Specialist?
“If you’re Kmart, there’s no reason for being,” says Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking shop in Manhattan. “Are they building stores? No. Are they improving anything for the customer? No. Sears Holdings as a company is in liquidation.”
Not that the stock and debt of the parent company exactly scream liquidation. Sears Holdings, the brainchild of hedge fund owner Eddie Lampert, has soared this year as the company has raised cash, bought back stock, and shuttered and divested stores and subsidiaries. But this comes amid the retailer’s fifth straight year of declining revenue; in the latest quarter, Kmart’s comparable store sales were down 4.7 percent.
Sears Holdings was recently kicked out of the Standard & Poor’s 500-stock index. It was removed from the Dow Jones industrial average in 1999.
Lampert, in his letters to shareholders, has chafed at the idea that Sears Holdings has to spend more on marketing and store upkeep at Kmart and Sears.
“Despite what some believed, increased marketing spend and increased inventory dollars do not automatically generate higher sales or higher profit,” he wrote in February. “More marketing and inventory dollars are not required to generate higher sales or profits, especially in a company that already spends over $ 1.5 billion in marketing and has over $ 8 billion invested in inventory on a consolidated basis. In fact, if you were to compare the amount of space and inventory we invest in our Sears apparel and home fashions businesses to other significant softlines retailers, you would agree that it should be possible to more than double sales and generate significantly higher profits without any additional investment in inventory, marketing or physical space. To do this, however, requires changes in our thinking and our processes, some of which are currently under way.”
To wit: Sears Holdings is subdividing existing, operational store space so it can be subleased to grocery stores, health clubs, and a Forever 21 fashion apparel store. The company openly lists its available square footage.
“I think Eddie is trapped in a no-win situation,” says Steven Platt, director of the Platt Retail Institute, a Hinsdale (Ill.) consultancy that publishes the Journal of Retail Analytics. “He can’t turn around the stores and he can’t sell the chain. He can dump assets to generate cash. But Sears Holdings is a retail dinosaur.” Last year, Platt put out a note titled “Sears acknowledges that it is in the real estate liquidation business (sort of),” where he said he was vindicated in his suspicion that Lampert was chiefly interested in “milking” the venerable, but moribund, retailers for cash.
Survival for Kmart, says Platt, “is a matter of degree. The store is irrelevant and its customer base is hurting. But with some 1,300 or so stores and $ 15 billion in revenue, they are not likely to go away quickly.”
Enter Kmart’s central paradox: While the store might have no compelling reason for being, it can’t just be shut down overnight, says Davidowitz. There are, he says, too many moving parts for Sears Holdings’ creditors; too many bank agreements and countless square footage that would suddenly inundate a weak market. He cites the parent company’s recent sale of top locations to General Growth Properties (GGP) as the kind of “orderly liquidation” Lampert can use to preserve its otherwise atrophying value as a retailer. “But can Kmart compete with anyone?” asks Davidowitz. “The answer is no.”
Shannelle Armstrong-Fowler, the Kmart spokeswoman at Sears Holdings, declined to comment, citing a quiet period ahead of the earnings release.
In January, Moody’s (MCO) analysts Scott Tuhy and Kendra Smith downgraded the company’s credit two levels and kept a negative outlook, citing “persistent negative trends in sales, which continue to significantly underperform peers” as the retailer doesn’t invest enough in its stores and service.
To be in discount retailing nowadays is to be bombarded by peer pressure. Witness the resurgence of layaway, which Kmart offers throughout the year and for which it could traditionally count on certain customers to pay a reliable $ 5 or $ 10 fee every few months. In September, though, Kmart moved to free layaway, ostensibly in response to aggressive layaway promotions from Wal-Mart and Toys “R” Us. Then there’s the ubiquitous onslaught of free shipping, as led by Amazon Prime.
All of which makes it ever harder for Kmart to cut to the brutal chase of competing on price. For example, in a Bloomberg Industries study of a basket of back-to-school items, Kmart was mildly cheaper than Staples (SPLS), after being significantly more expensive just three weeks earlier. But even as it managed to beat Staples on price, Kmart remained “significantly more expensive” than Target and Wal-Mart.
Starved for marketing and more expensive than your discount competition is, to paraphrase Dean Wormer, no way to go through life.
CAIRO (AP) — Egypt has recalled its ambassador to Israel after an Israeli airstrike killed the military commander of Gaza‘s ruling Hamas.
In a statement read on state TV late Wednesday, spokesman Yasser Ali said that President Mohammed Morsi recalled the ambassador and asked the Arab League‘s Secretary General to convene an emergency ministerial meeting in the wake of the Gaza violence.
Morsi also called for an immediate cease fire between Israel and Hamas, an offshoot of Morsi’s Muslim Brotherhood. Israel says it struck in response to rocket attacks from Gaza.
Hours earlier, Morsi’s Muslim Brotherhood group denounced the Israeli airstrike as a “crime that requires a quick Arab and international response to stem these massacres.”
Relations between Israel and Egypt have deteriorated since longtime President Hosni Mubarak was ousted last year.
Verizon and HTC unveiled a new device that the two hope will appeal to customers during the holiday season, while helping to reverse HTC’s floundering fortunes.
The phone, the Droid DNA, sports a 5-inch screen, putting it more in the “phablet” category with Samsung‘s Galaxy Note. It runs on Android 4.1.1 Jelly Bean and includes a boatload of powerful features, including a Super LCD 3 display with 440 pixels per inch, capable of playing 1080p HD video.
HTC noted the screen rivals traditional HDTVs, while the pixel density is among the highest available on any smartphone. The iPhone 5′s Retina display, for example, is 326 pixels per inch.
The device runs on a quad-core, 1.5Ghz Snapdragon processor from Qualcomm, with 4G LTE integrated on the same piece of silicon as the application processor. Having one chip instead of two improves battery life.
The phone is also capable of wireless charging and full HD video chat. The device has an 8-megapixel rear-facing camera and a 2.1-megapixel camera in the front. HTC noted its phone features HTC ImageSense and HTC ImageChip to create faster image processing and better quality photos, as well as a quick-launch camera option.
The Droid DNA also has Beats audio and two amplifiers, one for headphone and one for speaker. And it’s equipped with near-field communications technology to share music and other content by tapping other NFC-enabled devices.
Droid DNA goes on sale on November 21 for $ 199.99 with a two-year contract. Pre-sales begin today. The phone is available exclusively through Verizon.
The hefty specs should appeal to customers looking for alternatives to the latest gadgets from Samsung and Apple during the holiday season. For HTC, it’s pretty important that they do.
The Taiwanese handset maker really needs a hit phone. Previously the darling of the smartphone world, HTC has been having a tough time lately. Samsung and Apple are dominating the industry’s profits and market share, leaving little for HTC, Motorola, Nokia, and other handset vendors. HTC also has faced litigation, though it reached a settlement with Apple a few days ago.
The company has said it plans to go bolder with its messaging to consumers and the media, relying less on joint marketing campaigns with the carriers and standing more independently to tell the HTC story. It also has said it would try to generate buzz through social media and by seeing out influential celebrities and “superfans” for endorsements. So far, it’s unclear whether such steps are paying off.
(Reuters) – A pill for rheumatoid arthritis being developed by Eli Lilly and Co and Incyte Corp maintained its effectiveness in reducing painful symptoms through 24 weeks of treatment in a midstage extension study, according to data presented at a medical meeting on Tuesday.
A sub-study of patients taking part in the trial of the drug, baricitinib, also showed that the two highest doses tested helped to reduce joint damage, based on Magnetic Resonance Imaging (MRI) tests.
The companies in June released positive data from the 301-subject Phase II study after 12 weeks of treatment in patients with mild to moderate RA who had an inadequate response to methotrexate. Data from the ongoing extension study, presented Tuesday at the American College of Rheumatology meeting in Washington, measured baricitinib treatment through 24 weeks.
After 24 weeks, 73 percent of patients who received 8 milligrams of the Lilly drug once daily achieved the ACR20 goal, or a 20 percent improvement in rheumatoid arthritis symptoms. That compared with 78 percent who hit ACR20 at 12 weeks.
For the 4 mg dose, 78 percent of patients hit ACR 20 at 24 weeks, up from 75 percent at week 12.
A 2 mg dose that failed to show statistical significance compared with a placebo at 12 weeks, had 63 percent of patients achieve ACR20 by week 24 of treatment, the data showed.
The study also measured ACR50 and ACR70 rates, or 50 percent and 70 percent improvement. All three doses showed improvement at 24 weeks from measurements taken at 12 weeks.
Baricitinib belongs to a hot new class of oral medicines called Jak inhibitors that aim to compete with the multibillion-dollar injected rheumatoid arthritis drugs that currently dominate the market. Pfizer Inc last week became the first company to bring one of the new drugs to market with the U.S. approval of tofacitinib, which will be sold under the brand name Xeljanz.
Jak inhibitors block enzymes believed to be involved in the inflammatory process.
In the sub-study of 154 patients who underwent MRI testing, there was a statistically significant improvement in measures of inflammation and joint damage at the 4 mg and 8 mg doses after 12 weeks compared with placebo, the companies said. The effects persisted through 24 weeks, they said.
In order to compete with the biologic blockbuster injected drugs, such as Abbott Laboratories’ $ 8 billion a year Humira, the Jak inhibitors must show that they can prevent or delay joint deterioration as well as alleviate symptoms.
(Reporting by Bill Berkrot in New York; editing by Matthew Lewis)
Energy Secretary Ed Davey: “Market abuse is always wrong”
Energy Secretary Ed Davey has promised tough action if allegations that firms manipulated the wholesale gas market turn out to be true.
The Financial Services Authority (FSA) and Ofgem are looking into the claims, which were made by a whistle-blower who was active in the market.
Mr Davey said he was “extremely concerned” and would apply the “full force of the law” if needed.
All of the UK’s big six energy suppliers have denied any involvement.
Mr Davey told MPs: “Market abuse is always wrong, but at a time when people and companies are struggling with high energy bills, the country would expect us to take firm action if these allegations prove true, and we will.”
The body that represents the companies, Energy UK, said its members would co-operate fully to rebuild trust.
Its chief executive, Angela Knight, said: “This is a very serious issue which must be investigated swiftly. The gas market is an international one with many overseas companies trading on it, as well as organisations that are not energy companies.
“Customers need to have confidence in markets and authorities need to have the powers to regulate well and take action if required.”
The wholesale gas market includes everything from the UK’s own North Sea gas supplies, to gas from Norway or elsewhere, or arriving in the UK by ship as LNG, liquefied natural gas.
Widespread
The alleged manipulation is said to have reduced the wholesale price.
The whistle-blower, Seth Freedman, worked at ICIS Heren, a financial information company that publishes energy price reports.
Whistle-blower Seth Freedman: “It would seem that if you are manipulating prices on key dates then certainly millions, if not more, are at stake on each contract”
His concerns are focused on one instance on 28 September this year.
But he told the BBC he thought that price-fixing was widespread: “Having spoken to traders and other market participants, it seems like manipulation is rife in the gas market.”
He said even though the alleged instance may have not added to customers’ bills, it was still damaging: “There’s certainly a link. They [the power companies] are telling you: ‘Look, in order to make our profits and cover our costs and so on, we have to give a price to retail customers which reflects the cost to us.’
“But if you can’t trust the market at a wholesale level, it becomes a crisis of confidence. People at retail level are just thinking, ‘I don’t trust these companies’ – and it needs to be scrutinised.”
Continue reading the main story
Analysis
Jonty BloomBusiness correspondent, BBC News
The allegation claims that dealers make unrealistic bids, at exactly the time when information is being gathered to set the gas price, in an attempt to get a more favourable rate and so make a larger profit.
All the major domestic gas suppliers say that they have not manipulated the market.
But with household energy bills increasing sharply and winter fast approaching, the allegation that the market is vulnerable to manipulation by other unscrupulous dealers is obviously being taken extremely seriously.
‘Less transparent’
Energy companies buy gas at the wholesale price and then sell it on to businesses and domestic users.
The allegation is that the market was rigged in a similar way to the fixing of Libor, the inter-bank lending rate.
It is claimed that on 28 September, dealers made unrealistic bids, at the time when information was being gathered to set the wholesale gas price, to suit their own trading position.
David Hunter, an analyst at M&C Energy Group, said that most wholesale trading is done directly between companies, rather than via an electronic trading system, and that this system is, in theory, easier to manipulate.
He told the BBC: “This sort of trading is less transparent than a fully-fledged market. Hypothetically, someone could seek to artificially lower the price by making small trades below the prevailing market price that may benefit them.”
The cost of wholesale gas makes up the majority of our energy bills – 45% of the average energy bill is made up of the cost of wholesale gas, supply costs and profit margins.
Continue reading the main story
Energy company responses
EDF Energy said it “does not participate in loss-leading trading activity and considers it to be against existing market regulation”.
“We make information likely to impact market price formation publicly available on our website.”
Npower said: “There is an explicit commitment in our code of conduct to comply with all laws and regulations.”
Scottish Power said that it had “never engaged in trying to fix wholesale gas trading markets”, adding: “Our trading division always acts with integrity and follows all rules in all of its engagements with the market.”
SSE said: “We are entirely confident that our energy portfolio management team operate in a fair and legitimate way.”
E.On said: “We are confident that all of our colleagues always act in the correct manner and as a company we fully abide by all appropriate regulations.”
Centrica, which owns British Gas, said it had “very robust governance and compliance policies” which were regularly reviewed. “Centrica’s traders are prohibited from providing price information to price reporting agencies,” it added.
‘Considering evidence’
The Guardian reported that investigations were taking place into “some of the big six” energy providers, but the brief statements released by both the FSA and Ofgem did not identify any companies.
The FSA said: “We can confirm that we have received information in relation to the physical gas market and will be analysing the information.”
Ofgem also said it had “received information” and added that it would “consider carefully any evidence of market abuse that is brought to our attention as well as scope for action under all our other powers”.
The government is currently increasing regulation of the energy market.
Its Enterprise and Regulatory Reform Bill is intended to improve the competition regime and the protection of consumers and is currently with the House of Lords.
It is also working with Ofgem on the implementation of the EU Remit (Regulation on Wholesale Energy Markets Integrity and Transparency) which may lead to giving Ofgem greater powers to act against market abuse.
‘Unusual’
Labour’s shadow energy secretary, Caroline Flint, said that if the reports proved to be true, they “suggest shocking behaviour in the energy market, that should be dealt with strongly”.
She said that gas and electricity companies should be forced to sell the energy they generate into a pool, in order to open up the market and ensure fairer consumer prices.
ICIS Heren said it had “detected some unusual trading activity on the British wholesale gas market on 28 September 2012, which it reported to energy regulator Ofgem in October”.
It added: “The cause of the trading pattern, which involved a series of deals done below the prevailing market trend, has not yet been established.
“If anyone was to benefit from this, it would have been derivatives traders.”
