With the rapid development in Distributed Energy Resources (DER) and their high penetration in medium voltage (MV) distribution networks, there is significant research interest in new operational scenarios involving Local Energy Markets (LEM). The evolution of the Internet of Things (IoT) and cryptocurrencies are envisaged to empower LEM schemes such as Peer-to-Peer (P2P) energy trading. P2P trading has the potential to decentralize the present networks’ operation, but it is unclear how the current grid will respond to such massive integration of renewables and DERs. Violation of network physical constraints is perceived to be a major challenge while implementing P2P schemes. This paper proposes a method to assess the impact of auction-based P2P transactions on the network that guarantees the exchange of energy without violating the network constraints. The method is tested on the modified IEEE 6-bus system and the results confirm the effectiveness of the proposed method. It ensures that the energy is exchanged between participants without violating the constraints in such a manner that they can still benefit economically under the P2P scheme.