Pre-Negotiation

For full details of Pre-negotiation procedures please see ASX 24 Operating Rules and ASIC Market Integrity Rules (ASX 24 Market). In addition, please see the Energy Market Policy for further details.

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 zero;
  • 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.