On of the biggest Norwegian power traders has been banned from trading on Nasdaq after he incurred massive losses he could not cover, leaving numerous commodities and energy firms who are part of the Nasdaq clearinghouse, and the exchange itself, to cover more than a hundred million dollar hole in a contingency fund.

Einar Aas, a private trader who has been among Norway’s highest earners in recent years thanks to aggressive bets in European power markets, saw his positions collapse on Monday after extreme market moves in German and Nordic energy markets, the FT reported. Aas had taken on a massive position that was too big in relation to the liquidity in the market, Dagens Naeringsliv reported, citing a statement from Aas.

After “extraordinary price changes” in Nordic and German power contracts, Aas was directed to pay the exchange his last available liquid funds earlier this week according to Bloomberg.

He could not: “My position was too big in relation to the market’s liquidity,” Aas said, adding that his portfolio had been liquidated by Nasdaq on Wednesday and that he risked personal bankruptcy.

After the forced liquidation, the loss for Nasdaq’s default fund swelled to $117 million. Bloomberg said that while the Nasdaq would not identify the responsible party, it said that “a trader had been expelled after losses from betting on the spread between Germany and Nordic power prices exceeded the collateral needed to back trades.”

“I think it’s an extreme situation. These two markets have always been correlated when it comes to price movements,” Nasdaq European Commodities Chief Executive Catharina Hovemyr told Reuters.

According to the FT, the losing trade was triggered by a jump in the price of carbon allowances in Europe that have been the best performing commodity so far this year and a source of bumper profits for hedge funds and investment banks. Rising carbon prices, which are trading at a decade high, have dragged up natural gas and electricity markets in continental Europe.

At the same time, a forecast of wetter than previously anticipated weather in the Nordic region, where hydropower is a big contributor to electricity supplies, pushed prices on the so-called Nordpool market far lower.

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The size of Aas’ position had been “out of the ordinary,” she said, although she would not disclose the exact value of the trade. “If a market participant does not pay within a couple of days they will not be able to trade in Nasdaq,” said Henning Nymann, a power trader at Norway’s TronderEnergi.

“This will make a lot of market participants unsure about trading schemes. It has a potential to move the market, the futures,” said Norwegian Water Resources and Energy Directorate adviser Martin Andreas Vik.

Nasdaq did not tell Reuters who was the counterparty that had purchased the bad derivatives.

Norwegian state-owned power giant Statkraft and electricity firm Hafslund E-CO Group are among some of the exchange members who will soon have to cover major losses in the contingency fund.

“We will, of course, fulfill our obligations and fill the fund according to our share in it. We are not completely aware of the amount, but it is a moderate amount of money,” Hafslund E-CO spokesman Per-Arne Torbjoernsdal said. 

Aas had a taxable income of Nkr833m ($101m) and a fortune of about Nkr2.1bn ($245m) in 2016, according to the Norwegian government’s public tax return data. The media-shy energy trader, from Grimstad in southern Norway, worked at Interkraft Trading, owned by Agder Energi, before leaving to trade with Nkr250,000 ($30,000) of his own money, according to Norwegian newspaper reports.

Nasdaq said no criminal activity was suspected and no end-user was in risk of losing their electricity supply.

As the saying goes, market liquidity is great, until it is not.

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