16 Aug 2011

NZX to extend derivatives trading opportunities

6:51 am on 16 August 2011

NZX hopes to extend its derivatives trading beyond just dairy futures by the end of 2011.

Last year NZX launched a dairy futures market allowing buyers and sellers to lock in milk prices for delivery at a later date.

Chief executive Mark Weldon says the market has been performing very well compared with overseas rivals, growing 35% for each month in the nine months since it was listed.

He says he expects dairy to be the franchise product for the New Zealand market in the same way that palm oil is the franchise product for the Malaysian exchange.

However, Mr Weldon says the market needs to be broader than just one product and NZX is considering adding some futures products that track the NZX equity market indexes and one other commodity product.

He expects to announce the details within the next two to three weeks.

Mr Weldon expects the additions to take the derivatives operation from being just one product to a real market and that he says will see a big change in the way the world views its investment opportunities in New Zealand.

Trading spike

Meanwhile, last week's market turmoil caused a large spike in trading on the NZX market, as well as internet traffic to its new website.

But Mr Weldon says the volatility could cause firms to rethink their plans to list on the stockmarket and perhaps delay them.

He says six firms are in the pipeline NZX knows about and he expects the majority of those to list before the end of 2011.