Hedge Market Enhancements - consultation begins for permanent mandatory market making backstop proposal
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The Authority is considering amending the Code to insert a permanent mandatory market making backstop as part of its enduring approach to market making. The Authority has released a consultation paper for stakeholder feedback.
In February 2020, the Authority made a temporary urgent Code amendment to insert a dormant mandatory market making scheme into the Electricity Industry Participation Code 2010 (Code). The arrangements worked well to support market making performance during periods of market stress throughout the year.
This proposal will make these arrangements permanent. The dormant scheme is a backstop measure that would only be triggered into effect for one or more market makers if the performance standards set out in the Code amendment were not met.
Market making services are important to ensure participants have access to efficiently priced risk management contracts and to produce a reliable view of future prices (the forward price curve).
Market making performance is monitored closely by the Authority. If performance materially deteriorates while we are in the process of implementing a mandatory market making backstop, the Authority will act decisively, and an urgent Code amendment can be implemented again quickly.
The Authority is currently managing the transition to its enduring market making approach, which includes an incentivised market making scheme with commercial providers. Participants can remain confident in wholesale market competition and their ability to manage risk as we deliberately transition over several years to ensure market making services continue and the integrity of the forward price curve is protected.
The consultation closes on 18 January 2021.
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UTS preliminary decision - supplementary consultation
Ending: 27/11/2020 5pm
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Consumer care guidelines
Ending: 27/11/2020 5pm
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2021/22 levy funded appropriations
Ending: 8/12/2020 5pm
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Hedge Market Enhancements: Permanent mandatory market making backstop proposal
Ending: 18/01/2021 5pm
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Level 7, Harbour Tower, 2 Hunter Street, PO Box 10041, Wellington 6143, New Zealand
Tel: + 64 4 460 8860 Email: communications@ea.govt.nz
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