NZX releases paper on derivatives market that will start with milk powder

Friday 9th October 2009

NZX Ltd., the operator of New Zealand’s stock exchange, is seeking feedback on the rules and procedures of its proposed derivatives market.

Releasing the two 100-page documents on Friday night, the bourse operator has given a three-week timeframe to receive and consider submissions on the regulation and operation of the as-yet unnamed derivatives market.

The NZX highlighted two procedural matters to be considered by submitters around reporting outside trading sessions, and matching pre-negotiated orders, or block trades, where the spread between the buy and sell price is wider than the minimum price movement.

“The procedures do not yet include detail of the trading times for the XXX market,” the NZX said in its consultation memo. “NZX is finalising the contract specifications and the underlying contract for the whole milk powder derivative.”

The bourse operator plans to launch a whole milk powder market to allow participants to hedge dairy price risk, and expand into other commodities over time.

This week, the company bought Australia’s Clear Grain Exchange for A$6.4 million, adding grain trading to its growing suite of agricultural products. Shares in the company gained 0.6% to $8.20, and have soared 66% this year, making it the second-most successful company on its own bourse.

The company is upgrading its Clearing & Settlement system to improve the risk profile of NZX markets and broaden the product set available to investors and is scheduled for launch on Nov. 20. Equity options, index futures and dairy commodity derivatives products will be launched in a phased approach in the coming year.

Businesswire.co.nz

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