GENERAL: NZX: Market Maker for NZX Derivatives Market Contract

13 Aug 2010 2:48 pm

NZX 13/08/2010 GENERAL

REL: 1448 HRS NZX Limited

GENERAL: NZX: Market Maker for NZX Derivatives Market Contract

Market Maker for NZX Derivatives Market Contract

13 August 2010 - NZX is seeking expressions of interest from eligible persons interested in becoming a Market Maker for NZX Derivatives Market Contract No. 1 - Global Whole Milk Powder (WMP) Futures.

Capitalised terms used but not defined in this announcement have the meanings given in the draft NZX Derivatives Market Rules or the draft NZX Market Maker Agreement as appropriate.

1) Introduction

a) Subject to Authorisation, NZX intends to launch NZX Derivatives Market Contract No. 1 - Global Whole Milk Powder (WMP) Futures ("WMP Futures") in September 2010. i) Note: NZX is in the process of applying for authorisation to operate a futures exchange under the Securities Markets Act 1988 ("Authorisation"). As at the date of this announcement the NZX Derivatives Market Rules ("Rules") and Procedures are still subject to regulatory approval and subject to change. NZX makes no representations as to the timing of authorisation and reserves the right to amend the Rules and Procedures as it sees fit. ii) This announcement is intended as a general outline of NZX's Market Maker Programme ("MMP") for WMP Futures and to invite expressions of interest from eligible persons who may wish to apply to NZX to become a Market Maker.

2) Application Process

a) Persons who are interested in applying to become a Market Maker in WMP Futures must submit an expression of interest to NZX by 20 August 2010 using the NZX Market Maker Application Form ("Application Form"). Persons wishing to do so will be supplied with an Application Form upon request. An expression of interest contained in an Application Form shall not create any binding contract or obligation. b) An Applicant for Market Maker status must be either: i) A Trading Participant in the NZX Derivatives Market ("Trading Participant"); or ii) A Client of a Trading Participant. c) Prior to Authorisation, an Applicant may also be: i) A person awaiting accreditation as a Trading Participant; or ii) A person who intends to become a Client of a Trading Participant. d) An Applicant will be required to formally complete an Application Form and enter a Market Maker Agreement("Agreement") with NZX prior to being eligible for accreditation as a Market Maker. On Authorisation, NZX will, at its discretion, decide whether to accredit an Applicant as a Market Maker for the purposes of the MMP. i) It will be a condition of an application for Market Maker status from a Client of a Trading Participant, that the relevant Trading Participant be liable as principal to NZX for the Client's Market Maker Obligations and for Orders entered into the Trading System by the Market Maker. e) It will be a condition of all applications for Market Maker status that the Applicant's Clearing Participant has agreed to the Applicant's application.

3) Market Maker Agreement

a) NZX shall not be obliged to accept or reject any application for Market Maker status. b) An Applicant will not be eligible to receive any Market Maker status or receive any Market Maker Incentives until such time as both the Applicant and NZX execute an Agreement. c) The Agreement will include NZX's standard terms along with any Market Maker Incentives and Market Maker Obligations, to be agreed on a case-by-case basis with each individual Applicant. For clarity, a completed Application Form does not constitute an Agreement. d) Agreements will not be concluded prior to Authorisation.

4) Market Maker Incentives a) Any Market Maker Incentives would be negotiated between each Applicant and NZX. b) Trade priority advantages will not be offered as Market Maker Incentives.

5) Market Maker Obligations

a) Market Makers will be required to meet specified and agreed Market Maker Obligations, for an agreed percentage of each Trading Day, as specified in the individual Agreement.

6) NZX MMP Objectives

a) The MMP is intended to encourage and maintain liquidity in all 18 Contract Months of the WMP Futures. b) NZX's preference is that any MMP will run for a minimum of six months from the date of "go live" of the NZX Derivatives Market. c) NZX has provided an indication of preferred bid/offer spread and quote size in the table below.

Contract Month Continuous Basis Minimum Percentage (%) Maximum Bid/Offer Spread (USD) Minimum Quantity (on Bid and Offer in Lots) First 6 contract months 80% $25 50 Next 3 contract months (Months 7-9 inclusive) 80% $35 30 Next 3 contract months (Months 10-12 inclusive) 80% $50 25 Next 3 contract months (Months 13-15 inclusive) 70% $100 10 Next 3 contract months (Months 16-18 inclusive) 60% $150 10

d) Applicants should regard these objectives as a starting point when making their applications. For the avoidance of doubt these are NZX's preferences only. NZX encourages Applicants to submit details of Market Maker Obligations they would be prepared to meet.

If you are interested in becoming a Market Maker for WMP Futures, want more details on quoting and parameters, or wish to request an Application Form please contact

Kathryn.jaggard@nzx.com

This announcement shall not constitute investment advice nor an offer, invitation, solicitation or recommendation to engage in any transaction. NZX and its subsidiaries take no responsibility for any errors or omissions or losses, direct, consequential or otherwise arising from actions based upon this information. Before entering into any transaction you should take steps to ensure that you understand the transaction and have made an independent assessment of its appropriateness in light of your own objectives and circumstances.

NZX and its subsidiaries offer services to Participants and to participants in its clearing and settlement system. Those who desire to trade any products available on any NZX market or to offer and sell any such products to others or to become a participant in the clearing and settlement system, should consider the requirements of the applicable Rules and other legal and regulatory requirements relevant to them, as well as the associated risks, before doing so. End CA:00198341 For:NZX Type:GENERAL Time:2010-08-13:14:48:09

More announcements for NZX