NZX today announced, that it has has been informed by three SOEs (Meridian, Mighty River Power, Genesis) and Contact Energy and Trustpower that, together as EnergyHedge Limited (EHL), they have decided to sign a contract with the Australian Securities Exchange (ASX) to undertake derivative market trading activities in New Zealand.
NZX respects the right of the generators to make a decision that they consider is in their own best interests.
However, NZX believes that this decision comes at a real cost to a number of sectors in New Zealand.
An Australian-based market will present significant barriers to entry for the type of small, innovative entrant who could bring about genuine price competition in the New Zealand electricity market. This will in turn limit the benefits for New Zealand electricity users: households and industry.
The decision is also a blow for the development of New Zealand’s capital markets and this country’s relevance as a financial centre, which is built one product and one institution at a time.
NZX has the market infrastructure in place, and is awaiting regulatory approval to launch a Clearing House. NZX recently announced the receipt of an application from a significant offshore participant to be a General Clearing Participant.
NZX will consider its options, ensure that its robust platforms are available should they be needed, and will assess the potential for launching hedge products specifically designed for small, innovative energy market participants.