London: Europe’s energy market regulator said it may take a recent US case against Barclays as a precedent to move against the practice of loss-leading trading in its own rules against market abuse.

Reuters reported earlier in November that dealers on Europe’s energy market commonly trade coal, gas or power at a loss to push up profits on futures prices.

Uneconomic or loss-leading trades are explicitly banned in the United States, where British bank Barclays has been accused of using them to rig California’s electricity prices, and the bank now faces a fine of $470 million.

In Europe, the law is not so clear. Unlike in the United States, the existing rules do not specify that such trading is illegal, and this means they are open to interpretation.

“Loss-making trades in physical commodity markets in order to profit from derivatives positions may artificially cause prices to be at a level not justified by market forces and may therefore constitute market manipulation,” ACER said on Friday in an emailed response to a Reuters query.

“The agency therefore considers the case practice of (US regulator) FERC relevant for the application of REMIT.”

The European Union adopted new rules on wholesale energy trading at the end of 2011 under the Regulation of Wholesale Energy Market Integrity and Transparency (REMIT).

But ACER said that it needs to wait for the European Commission and individual states to implement regulation to enforce REMIT before it can take action.

“The basis for ACER’s market monitoring will be the data collection according to Article 8 of REMIT, which is, however, dependent on the Commission’s implementing acts which still have to be developed by the Commission and are unlikely to be adopted before sometime next year,” ACER said.

A Commission spokesman said that it had put forward proposals to further tighten the rules.

Because ACER cannot act on its own behalf under the REMIT rules but can only urge national regulators to interfere, ACER said action could only be taken once national governments had implemented European law.

“As soon as penalties are implemented into national law, breaches of the market abuse prohibitions of REMIT can be fined by national regulatory authorities,” ACER said.