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New Zealand dairy derivatives go live on SGX
Partnership between two bourses aims to boost market distribution
Tom King 30 Nov 2021

Under a new partnership between two bourses, New Zealand’s Exchange (NZX) has transferred its suite of dairy derivatives to trade exclusively on the Singapore Exchange (SGX).

The listing of the SGX-NZX global dairy derivatives contracts aims to combine NZX’s market development expertise in dairy derivatives with SGX’s global distribution capability, and is a result of the strategic partnership that was entered into between the two exchanges in April 2021.

NZX launched its dairy derivatives market in 2010 to enable market participants across the dairy production chain, from farmers through to manufacturers of dairy products, to manage price risks inherent in global dairy markets.

Over the past 11 years, NZX has grown the contract suite to include eight futures and options contracts across dairy ingredients including whole milk powder, skim milk powder, butter and anhydrous milk fat as well as liquid NZ milk price contracts. NZX has five member firms connected to the market and two independent software vendors (ISVs).

As part of the partnership, NZX delisted its suite of dairy derivatives contracts from the NZX Derivatives Market with equivalent contracts relisted on SGX.

Commenting on the partnership, NZX chief executive Mark Peterson says boosting market distribution will bring together significantly more buyers and sellers globally, increasing trading activity and benefiting all dairy market participants, including New Zealand’s dairy farmers and processors who find these contracts particularly important in managing risk.

“With the physical dairy market continuing to evolve, working in partnership with SGX opens up the potential to grow these derivative products to many multiples of the physical dairy market,” Peterson says.

He adds that the number of trading and clearing firms has been expanded from four to more than 70 and ISVs from two to more than 25, with SGX’s 10 international offices offering significantly greater regional sales support.

Loh Boon Chye, SGX chief executive officer, remarks: “The past few months have been extremely fruitful for both SGX and NZX, as we worked together to execute this first-of-its-kind partnership between two exchanges to internationalize and grow the liquidity of a well-established product that will benefit the global dairy industry.”

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