Temporary changes to market-making requirements

The Electricity Authority Te Mana Hiko has made temporary changes to market-making requirements to maintain liquidity in the forward market.

We have widened spreads and reduced lot size to reduce the impact of current conditions and to enable market makers to manage the costs of providing liquidity and price transparency.

The Electricity Authority is aware that market makers are finding it increasingly challenging to fulfil their obligations to the standard specified under their contractual requirements and in the Electricity Industry Participation Code 2010.

The forward market, traded on the ASX, is currently experiencing stress due to underlying physical conditions impacting prices in the spot market.

The Electricity Authority believes an inability to access hedges in this forward market will increase costs and financial risks for participants and this will adversely affect consumers.

We are developing an urgent Code amendment to give regulatory certainty for market makers and plan having this in place at the end of the month.

As previously signalled, we will consult on enduring market-making settings later in the year.

Read our letter to market makers