Published On: Thu, Oct 7th, 2010

NZX Dairy Futures Set To Go Live

New Zealand’s capital markets are set for a transformation with tomorrow’s launch of NZX Dairy Futures.

The launch will make NZX the only company to offer a truly global, cash settled, exchange traded futures product that enables participants to manage risk in the world dairy market.

The first product to start trading will be the Global WMP Futures Contract which is already attracting international attention, with a number of large offshore dairy processors and financial institutions expressing interest in a product that will enable them to manage the significant ongoing volatility in global dairy prices.

NZX plans to launch additional Dairy Futures products in the coming months.

Being cash settled, NZX Dairy Futures will not expose participants to the additional risks associated with other futures products that rely on physical delivery.

“NZX developed Dairy Futures in response to the needs of a wide range of users at every stage in the dairy supply and production chain. Their input, energy and support have been invaluable in the final design and shape of the product,” said NZX Head of Markets Fiona Mackenzie.

‘We have also enjoyed working closely with the Ministry of Economic Development, The RBNZ, the Securities Commission and government to make this market a reality,” said Mackenzie.

NZX Dairy Futures represent the next stage of New Zealand capital markets’ development at a time when global volumes in equities have seen double digit declines.

“We believe moving into commodities will position NZX strongly in the long term, given that risk management products, including futures, have shown consistently high activity levels and volume growth in recent years,” said NZX CEO Mark Weldon.

“From an NZX perspective, this gives us strong operational leverage off our existing infrastructure investments. From a New Zealand markets perspective, the Dairy Futures market will see locally based capability and jobs spring up around it over time, which is good news for our New Zealand skill base,” said Weldon.

Dairy Futures will be traded on the NZX electronic trading platform Global Vision, and centrally cleared through NZ Clearing Corp.

Trading and contract information:

NZX Dairy Futures will be traded on the NZX Derivatives Market, and are subject to the NZX Derivatives Market Rules and Procedures.

Trading hours are daily 08.00 hours to 16.00 hours New Zealand time.

The contract price basis is US dollars per metric tonne with a US$5 minimum price movement.

Contract size is 1 metric tonne, and contract months consecutive calendar months up to 18 months forward.

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