The Government proposes to set up market governance for trading of New Zealand Units (NZUs) in the New Zealand Emissions Trading Scheme (ETS) secondary market (NZU market). These changes will progress as part of the Climate Change Response Amendment Bill.
The NZU market currently lacks clear and accessible trading information, conduct standards or a dedicated market monitor. This makes it hard for participants to make informed trading decisions, and it also creates a risk that misconduct, such as price manipulation, may go undetected or unaddressed.
The proposed market governance framework is intended to address the lack of trading information and risks of misconduct with light-touch measures that will:
The changes do not regulate NZUs in the same way as financial products. Only limited aspects of financial product regulation are included in these proposals: the prohibition of price manipulation and false, unsubstantiated and/or misleading conduct.
The changes are part of the Climate Change Response Amendment Bill (the Bill) that was introduced to Parliament on 15 July 2026. For more information on the Bill, including the process for public submissions via Parliament, see Amending the Climate Change Response Act
The proposed changes cover four key areas:
The Bill refers to trading platforms as ‘unit product markets’ for the purposes of the platform reporting requirements. Trading platforms may also be ‘unit market participants’ where they undertake activities captured by the wider framework.
ETS participants, other people who trade NZUs and those who broker trades or provide advice on NZUs or NZU products are ’unit market participants’.
If the Bill passes into law, the proposed changes described below would take effect in stages. The platform reporting and market conduct obligations will be implemented first, followed by Register reporting once a replacement Register is operational.
Trading platforms would be required to report price and volume information daily to the Ministry for Cities, Environment, Regions and Transport (MCERT). Trading platforms would also have obligations under other parts of the market governance framework, but these requirements are specific to them.
MCERT would be the initial market monitor, able to request and assess trading information from NZU market participants. MCERT, the Financial Markets Authority (FMA), the Environmental Protection Authority (EPA), the Ministry for Primary Industries (MPI), and the Ministry of Business, Innovation and Employment (MBIE) would be able to share information as necessary to give effect to their regulatory responsibilities. In the future, the EPA may become the market monitor.
Two new market conduct obligations would prohibit price manipulation and false, unsubstantiated and/or misleading conduct. The FMA would have enforcement responsibility for these prohibitions.
All market participants would be required to record additional trading information in the replacement Register.
Register reporting will take effect once a Register with the necessary functionality becomes available. Once register reporting is implemented, aggregated trading information would be published periodically to support market transparency. This information will also support market monitoring.
The market conduct obligations are intended to capture conduct related to trading NZUs, including advice or services that influence decisions to buy, hold, or sell NZUs, or the timing, price, or strategy for those decisions. This includes broking NZU trades between clients.
They are not intended to capture technical forestry advice, ETS forestry compliance advice, or operational advice about forest establishment, management, carbon accounting, emissions returns or NZU entitlements.
Some forestry advisory services may still be affected where they include advice about NZU trading or financial positioning. For example, advice about whether or when to buy or sell NZUs, expected NZU prices, broking NZU trades between clients, or trading strategies may fall within the market governance framework.
Advice that is limited to forestry ETS obligations, forest management, or calculating NZU flows would generally remain forestry advice rather than market governance advice.
Trading platforms would be required to report to MCERT, at the close of every business day:
If trading platforms cannot determine a closing bid or closing offer price, they would be required to apply their commercial best efforts to provide a fallback price.
Trading platforms would have a one-month grace period following the platform reporting requirements coming into force.
Market participants, including trading platforms, would be required to maintain a seven-year history of trading information and provide this on request to the market monitor.
Once a replacement Register is built, all market participants would be required to enter additional NZU trading information into the Register, such as:
The specific details of register reporting will be determined through secondary legislation introduced at a later date, once the replacement Register and its required functionality have been developed.
A penalty regime would establish the consequences for breaching the market governance rules. The penalties are intended to be proportionate and align with comparable penalty settings in the Climate Change Response Act 2002, the Financial Markets Conduct Act 2013 and related legislation.
MCERT expects to work with trading platforms and market participants to ensure they are prepared to meet the new reporting requirements.
Administrative penalties may apply where trading platforms fail to report daily price and volume information or maintain a history of that information, or where market participants fail to provide information to the market monitor on request.
For serious breaches, MCERT may publish occurrences of non-compliance. Penalties would not apply automatically: MCERT would first investigate the breach and consider whether it occurred through no fault of the participant.
Market participants would have the right to review or appeal an administrative penalty.
Price manipulation and false, unsubstantiated and/or misleading conduct would carry stronger penalties, reflecting the potential risks to the integrity of the NZU market.
The FMA would be responsible for investigating suspected misconduct and taking enforcement action. Price manipulation would carry criminal and civil penalties. False, unsubstantiated and/or misleading conduct in relation to buying, holding or selling NZUs would carry a civil penalty.
The penalty rules include safeguards. In some situations, a person may have a defence to a criminal or civil penalty, and a person cannot be penalised twice for the same conduct.
For inquiries, requests for further information, or feedback about this work, please contact ETSfeedback@mfe.govt.nz.