Pre-Negotiation

For full details of Pre-negotiation procedures please see ASX 24 Operating Rules and ASIC Market Integrity Rules (ASX 24 Market).

Importantly, Participants will need to issue a Request for Quote (RFQ) to the market before they can execute the trade through ASX Trade 24. This allows other Participants to respond to the RFQ by entering a bid and/or offer in the relevant contract and ensures that the pre-negotiated trade occurs at a price consistent with market sentiment.

The benefits of pre-negotiation for futures and options contracts include:

  • The ability of futures brokers and their clients to register (as futures or options contracts) OTC forward, swap, swaption and cap transactions that have been pre-negotiated but can't proceed because of credit or other impediments.
  • The benefit of having the price and volume of the pre-negotiated transaction immediately transparent.
  • The benefit of having the pre-negotiated transaction on ASX Trade 24 to assist with the Daily Settlement Process.
  • The mandatory use of the RFQ mechanism for futures brokers and their clients to establish whether a better price exists.

Procedures

  • All electricity futures and options products may be entered into under ASX 24 Pre-Negotiated Business Orders Rules;
  • The maximum prescribed time periods for all electricity futures and options is 30 seconds (time between RFQ being issued and order executed);
  • The minimum volume threshold is 1 lot;
  • A Participant must have written authorisation from its Client(s) allowing it to pre-negotiate business on each Clients behalf; and
  • Once the prescribed time period has elapsed, the orders must be entered immediately, currently deemed by the Exchange to be no longer than 90 seconds.