ASX and EHL sign agreement

ASX and EHL sign agreement to further develop the New Zealand electricity futures and options market

The Australian Securities Exchange (ASX) and EnergyHedge Limited (EHL) have signed an agreement to further develop the New Zealand electricity futures and options market.

EHL Chair John Woods said the agreement was consistent with last year’s Ministerial Review of the performance of New Zealand’s electricity market.

In order to support the liquidity of the market, EHL’s owners will each seek to enter into bi-lateral market making agreements with the ASX.

ASX General Manager Energy and Environmental Markets, Anthony Collins, said the exchange was looking forward to working constructively with New Zealand participants and leveraging the ASX’s market development expertise to further develop the forward market for electricity in New Zealand.

“Financial institutions and brokers already servicing broader global energy markets are enthusiastic about trading the ASX listed New Zealand electricity futures and options contracts – particularly in the context of the Ministerial Review which concluded in late 2009. The support of financial institutions already active in global energy markets bodes well for liquidity in the New Zealand electricity futures market,” Mr Collins said.

Mr Woods said the ASX futures market had a number of clearing participants that would be able to provide competitive access to the futures market for New Zealand participants.

“The presence of a significant number of high quality clearing participants provides new participants with assurance that they will gain competitive access to the market.”

On the basis of receiving ongoing market making support, ASX will maintain and further develop a relevant set of electricity futures products. This will include the listing of futures contracts on the Whakamaru grid reference point. The ASX already lists the Otahuhu and Benmore nodes. The ASX will convene a New Zealand user group to consider product and market development issues.

Mr Woods said with the agreement now in place EnergyHedge would step into a more minor role – ensuring all participants could have full confidence in the market as it developed further.

ASX is seeking nominations for its user group by 15 June 2010. The group will initially comprise of representatives from new entrants, end-users and financial market participants. The first group meeting is to be held in Wellington on 29 June 2010. ASX will also conduct free information sessions for all interested parties in Wellington on 30 June 2010 and Auckland on 1 July 2010 (to be confirmed).

EnergyHedge Limited is a company established by the major generators to advance the development of the electricity forward market in New Zealand. The shareholders are Contact Energy Limited, Genesis Power Limited, Meridian Energy Limited, Mighty River Power Limited and TrustPower Limited.

ENDS

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