Click here to see GDT Director Eric Hansen explaining the changes
A summary of the changes is listed below or for more details view the GDT – Next steps for growth Stakeholder Consultation document
Proposal 1: Establish Oversight Board
To enhance the independence of GDT it is proposed to transition the GDT Advisory Board into an Oversight Board which will continue to comprise seller and buyer members. Changes would include:
- Members to select an independent chair;
- Addition of three financial members to reflect the financial derivative markets;
- Voting rights over rule changes;
- A compliance function where alleged rule breaches are investigated and reported on.
If implemented, a key outcome is that future changes to the GDT Market Rules will be subject to agreement of the Oversight Board as well as Fonterra as platform owner.
Proposal 2: Seller Forecast Statements
It is proposed to extend the GDT Market Rules to enable (but not require) a seller to specify forecast guidance ranges within which changes to their offer quantities and forecasts are expected to occur under normal circumstances. A seller who chooses to provide guidance ranges will be required, whenever they go outside the guidance range, to issue a statement explaining why this has occurred. The aim of this proposal is not to constrain a seller from changing their forecast, but to achieve greater consistency in the provision of explanations to the market.
Proposal 3: Additional GDT Data
We propose to significantly increase the information provided to the market by enabling all interested parties access to:
- Round-by-round data available in real time similar to what GDT participants observe;
- Post-event data on sold quantities and bidder participation, including distributions by aggregated bidder regions.
Subscription fees will be charged for access to this data. The Historical Data spreadsheet currently available as a free download from the Information Website will be updated to include the above data and will become part of the subscription service.
Proposal 4: Larger Pools of Demand and Supply
The current GDT auction process promotes liquidity by enabling a seller to assign multiple product specifications to belong in the same sales group. For example, in the case of SMP each seller has specified several product specifications such as low heat and medium heat as belonging to their respective SMP sales groups. We propose to extend this approach by enabling a seller to specify entire product groups as belonging in the same product pool. For example, AMF and butter could be specified as belonging to a cream pool. Key expected outcomes are improved liquidity, reduced price volatility, and a greater consistency of underlying milk component values being reflected in GDT winning prices. For example, in a cream pool there would be greater likelihood of AMF and butter prices reflecting a common underlying price for fat. The proposed approach will not increase complexity to bidders as they would continue to observe and bid on their individual products of interest as they do currently.
Feedback on the proposed changes can be made through an anonymous and confidential survey provided by TNS.
All surveys must be completed by the end of June 2015.
Please click here to provide your feedback
