By Ofgem Published: 08/06/2009

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In October 2008 Ofgem published the findings from its investigation into energy supply markets. The report found that the level of wholesale market liquidity, especially in the electricity market, was of concern and we noted that we would investigate this further. Industry participants and others have also raised concerns about wholesale liquidity, suggesting that inadequate liquidity is acting as a barrier to new entry into supply markets and may be a source of competitive disadvantage to small suppliers. This report finds that liquidity in the electricity market in Great Britain (GB) is lower than other energy and commodity markets, including a number of European electricity markets. The report analyses a range of factors that have contributed to the low level of liquidity in the GB electricity market, and outlines possible policy options that could improve liquidity.