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Derivatives

Oz Trade Group Preps For Energy Derivatives Boom

The Australia Financial Markets Association is gearing up for a larger range of energy derivative markets in the next year on the back of continued market evolution and expected regulatory changes.

The Australia Financial Markets Association is gearing up for a larger range of energy derivative markets in the next year on the back of continued market evolution and expected regulatory changes.

"We've had a lot of serious political debate which is further pushing forward to renewable energy markets," said Ken Farrow, chief executive of AFMA in Sydney. He added with the government expected to sign additional global environmental accords, domestic markets between polluters and efficient energy providers will develop quickly next year. For example, working groups have been established by members that are pushing for the creation of a national CO2 forwards market and natural gas contracts. Farrow expects derivative markets to launch by the second half of next year.

Additionally, the AFMA Fixed Interest Index, an interest rate futures contract, had a soft launch earlier this month. The contract, calculated daily using government, semi-government and corporate debt, provides a snapshot of the market and a hedging tool for fund managers. In the works since earlier this year (DW, 4/22), the index will have a formal launch in February.

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