Commercial market making

Expiry of Urgent Code for market making under high stress conditions

Upcoming Open Closed Decision
View submissions Submissions closed 14 April 2025
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Decision

We have decided to allow an urgent Code amendment to provide short-term relief for market-makers during periods of market stress to expire.

The amendment, implemented in September 2024, introduced a provision to reduce market making obligations when futures contract prices reach a specified price threshold. It has not been triggered and will expire on 12 June 2025.

We have decided to let the urgent Code amendment expire because we did not receive new information or evidence that it delivers clear, long-term benefits that outweigh its costs. There was also no clear consensus on an alternative to the expiration.

Any urgent Code amendment expires after nine months unless it is made permanent following a consultation process.

We are progressing work to strengthen security of supply which more directly targets the source of high prices in the spot and futures market. This includes measures to increase transparency of thermal fuel availability, strengthen competition in the supply of new generation to the market, and improve access to risk management tools.

We intend to undertake a wider review of market making later in 2025 to ensure the current Code obligations remain fit for purpose.

We would like to thank all those who engaged with this consultation.

Decision paper

Market making under high stress conditions - Decision paper

Market making under high stress conditions - Decision paper

Consultation

This consultation sought feedback on whether to make permanent, or allow to expire, an urgent amendment to the Electricity Industry Participation Code that provides relief from market-making requirements during periods of market stress.

In response to market stress during August 2024, we implemented an urgent Code amendment to reduce obligations on regulated market makers during periods of high futures market prices.

Under the amendment, a price-based test would be used to adjust market-making settings during times of stress.

An urgent Code amendment expires after nine months unless made permanent following a consultation process. This urgent Code amendment will expire on 12 June 2025.

The Authority is consulting on options including if there is an ongoing need for a relief mechanism for the effective operation of market making in the New Zealand electricity futures market.

The Authority’s current view, based on information and analysis not available when the original decision was made, is to let the urgent Code amendment expire and we welcome feedback and alternative views.

We also invited comments to inform a wider review of market making settings commencing in 2025.

Consultation paper

Consultation paper - Expiry of MM stress relief urgent Code

Consultation paper - Expiry of MM stress relief urgent Code

Submissions

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