Hedge market

The Australian Securities Exchange (ASX) electricity futures and options are standardised contracts structured as cash-settled contracts for difference against two grid reference nodes - Ōtāhuhu in the North Island and Benmore in the South Island.

Electricity futures market hedges are always settled directly with the ASX. The ASX also has separate prudential requirements for traders in this market.

The approved exchange platform for trading New Zealand electricity base load futures contracts is the ASX electricity futures market.

Over-the-counter (OTC) hedges are where buyers negotiate directly with sellers to agree on a price. These contracts can be customised and provide flexibility for both parties.

There are several OTC hedges to manage different types of risk:

• contracts for difference
• fixed price fixed volume
• fixed price variable volume
• other bespoke arrangements.

The majority of hedges are contracts for difference that are cash-settled each month based on differences between spot prices and the hedge's fixed hedge price.

OTC hedges can be settled directly between parties, or lodged with the clearing manager and settled at the same time as the parties’ electricity market transactions.

OTC hedges that are lodged with the clearing manager can also be used to reduce a party’s prudential requirement. It can be used to offset their purchases in the wholesale market.

Voluntary Code of Conduct

All participants in the OTC market are encouraged to sign up to a voluntary Code of Conduct. By signing up to the voluntary Code of Conduct, signatories commit to a number of underlying principles and behaviours when participating in the OTC market.

The signatories are: 2degrees, Contact, Electric Kiwi, emhtrade, Flick Electric, Genesis, Haast Energy Trading, Manawa, Meridian, Mercury, Prime, NZ Steel and Octopus.

The Code of Conduct was developed in 2023 by an industry working group to support an efficient and competitive OTC market that serves the long-term interests of New Zealand electricity consumers.

The Electricity Authority is working with the group’s members to develop appropriate monitoring arrangements to give all parties confidence that signatories are keeping the commitments made to one another.

Standardised super-peak trading

Super-peak trading provides participants with an additional tool to manage exposure during periods of high demand and price volatility.

A standardised super-peak contract was recommended by the industry co-design group. The contract is designed to improve liquidity, transparency, and risk management during peak demand periods.

Read the product specifications

Trading takes place on an Authority approved OTC platform operated by Marex. To support liquidity, designated market makers are required to provide continuous quotes during scheduled trading sessions.

• market makers must provide quotes for a minimum volume of 6 MW
• quotes must be maintained within a 5% bid-offer spread
• trading sessions are held fortnightly, generally on a Tuesday.

Each trading session starts at 10:00am and runs for 30 minutes.

Standardised super-peak contracts available for trade on an electronic platform are excluded from the OTC bids and offers data notice. Participants in the trading sessions do not need to provide information on bids and offers to the Authority.

Full 2026 trading session calendar

To trade super-peak contracts on the platform, participants must first register and onboard with Marex.

The onboarding process includes:

• qualifying as wholesale investors under the Financial Markets Conduct Act 2013
• being onboarded to Marex NZ Ltd for OTC electricity
• requesting access to the platform by contacting Marex at electricitynz@marex.com. You will be asked to provide a list of individuals requiring access and complete a template detailing your approved whitelist
• Installing Joule (trading platform) – instructions will be provided within Marex’s welcome email.

Financial transmission rights (FTR) hedges help parties manage risk from large and unpredictable differences in spot prices between two locations, or nodes, on the national grid. This is known as location price risk.

The FTR market enhances competition in the retail and hedge markets by allowing generator-retailers to compete for customers on a national basis, rather than just in regions near where they own generation assets. It also allows other retailers to compete in areas away from where they purchase the hedges.

What is an FTR?

A financial transmission right is the right to the difference in price between two hubs or dedicated locations. The hub from which the energy originates is called the source, and the hub where the energy exits is called the sink.

Energy can flow in either direction, so for each pair of hubs there are two potential financial transmission rights. One where the first hub is the source and the other where the second hub is the source. Each financial transmission right is further split into two products – options and obligations.

How the FTR market works

The FTR manager publishes the FTR allocation plan containing the auction rules and grid design. Auctions are held twice monthly. Before and during each auction, the FTR manager checks with the clearing manager that each party holds sufficient security to validate their bids. (View FTR market disclaimer.)

The clearing manager manages the prudential security and settlement of FTR. They also publish the FTR prudential security assessment methodology.

Industry participants need to disclose risk management contract information using the electricity hedge disclosure system website.

Industry participants can use the hedge disclosure system website to:

• view and compare hedge contract details
• produce historic contract curves to better understand the market
• view historic contracts which may assist when negotiating new hedge contracts.

Disclosures are anonymised to protect commercially sensitive information.

The Authority must publish risk management contract information as outlined in the Code.

In limited circumstances, the Code allows the Authority not to publish disclosed information where publication would not support accurate comparison of contracts or the development of accurate price curves. For example, publishing information about back-to-back contracts that have already been disclosed at historical prices could distort hedge market data.

If you think this exception may apply to a risk management contract, contact us at info@ea.govt.nz as soon as possible and before submitting the contract information through the electricity hedge disclosure system. This will allow us to consider the circumstances and take the appropriate steps.

Every participant who submits hedge information must certify they have disclosed information accurately. A hedge disclosure certification form must be completed and submitted by 30 June (as per clause 13.230 of the Code).

If you trade electricity contracts on the ASX, or other exchange, you are required (under clause 13.236AA9(2) of the Code) to consent for de-anonymised trading data to be shared by the exchange with the Electricity Authority. This helps provide quality data on risk management contracts to inform improvements to the wholesale electricity market.

Participants trading on the exchange need to:

• complete and return the following trading consent form
• ensure appropriate arrangements are in place with your broker and other market intermediaries, and provide your account identifier to the ASX.