NZX to Launch Milk Price Options Contracts in June Following FMA Approval

Just one month after the launch of milk futures contracts, the NZX has expanded its offering to include options.

The New Zealand Exchange (NZX) has announced the launch date of its milk price options contracts on June 30, which follows just a month after the release of its milk price futures contracts, part of an expansive offering on the exchange that looks to grant exposure into one of NZ’s largest markets, per a recent NZX statement.

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The NZX represents NZ’s largest capital markets issuer and listing entity, having received approval from the country’s Financial Markets Authority (FMA) and the Reserve Bank of New Zealand to implement and offer its proposed milk price futures and options contracts back in April.

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The launch of the new contracts contracts are designed to help assist farmers grapple and ultimately manage volatility across New Zealand milk prices – furthermore, outside players looking to gain access and exposure to the milk market will be able to have more flexibility in investments.

According to NZX Head of Markets Mark Peterson in a recent statement on the options launch: “It’s encouraging to see early market participation in the futures contracts, which are already being used to manage price risk in the 2017/18 season. Adding options to this suite of risk management tools provides farmers with greater flexibility in how they manage risk, and gets New Zealand on par with competitors overseas who already offer these tools to farmers.”

“New Zealand dairy farmers are highly exposed to volatility in the global dairy market – NZX remains focussed on growing market participation and trading activity, along with assisting to educate the industry on the benefits of risk management tools,” he reiterated.

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