NZX, New Zealand’s stock market operator, has accredited US-based Straits Financial to access its growing dairy derivatives market.
Straits has been accredited as a general clearing, trading and advising participant for the NZX dairy derivatives market, the first US clearing member to receive approval since authorisation was granted from the US Commodity Futures Trading Commission in February 2014, Wellington-based NZX said in a statement.
NZX launched the dairy derivatives market in October 2010 with the aim of becoming the global hub for trading tied to New Zealand’s biggest export commodity. Derivative volumes hit a record 35,000 last month and volumes so far this year are up 119 percent on a year earlier as increased liquidity draws in more trading and demand for risk management products rises in the face of uncertainty about the outlook for dairy prices.
The addition of Straits is expected to further boost dairy derivative trading on the NZX. Straits is a significant provider of services to agricultural hedgers in North America including many dairy customers, while Straits’ Asian business is far and wide, with customers throughout China, Indo-China and Southeast Asia. Straits is also a full clearing member of the Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, The Commodities Exchange, Clearport and the Dubai Mercantile Exchange.
“Securing the services of a firm with the calibre and reach of Straits is a significant step forward in expanding access to our market,” said NZX head of derivatives Kathryn Jaggard. “This reflects the growing demand we are seeing from dairy end users around the world to use these risk management tools.”
NZX shares last traded at 96 cents and have slipped 18 percent so far this year.