The AER has approved TOD Markets Pty Limited (TOD Markets) as a Market Liquidity Obligation (MLO) exchange for the purposes of the Retailer Reliability Obligation (RRO).
The AER has also approved 6 new electricity derivative contracts as MLO products for the RRO, specifically:
- flat day swap, evening peak swap, $300 flat cap and $600 flat cap contracts for trading on TOD Markets.
- morning peak electricity future and evening peak electricity future contracts for trading on Australian Securities Exchange Limited (ASX 24).
The updated register of MLO products for the RRO is available on the AER website.
The AER assessed the MLO exchange and product applications against the criteria in Chapter 4A of the National Electricity Rules and the interim Market Liquidity Obligation Guidelines.
The AER sought stakeholder views on the applications through formal submissions and targeted engagement with MLO groups. Stakeholders generally supported TOD Markets’ application to become an MLO exchange and the proposed MLO products.
We note that the Australian Energy Market Operator’s Electricity Statement of Opportunities 2026 did not identify reliability gaps in 2027-28 or 2029-30 and therefore there are not currently any MLO reliability instruments in effect. Additionally, we note the National Electricity Market wholesale market settings review which is currently under consideration has recommended the RRO be phased out with the establishment of an Electricity Services Entry Mechanism and a corresponding Market Making Obligation (MMO).
Background
The MLO is a market making requirement under the RRO framework designed to facilitate transparency and liquidity in the trading of electricity futures contracts relating to a forecast reliability gap.
The MLO operates when the RRO is triggered. If AEMO identifies a material reliability gap 3 years and 3 months out, it will apply to the AER to trigger the RRO by making a reliability instrument. Each Minister for Energy in a NEM region also has the ability to trigger the RRO by making an instrument directly. The National Electricity Rules require obligated parties in the relevant region to commence making bids and offers for MLO products on an approved MLO exchange.
A MLO exchange is a trading facility that is approved by the AER to facilitate the trading of MLO products. TOD Markets and ASX 24 are the current approved MLO exchanges.
MLO products provide a source of qualifying contracts for liable entities to purchase to help them meet their RRO contracting requirements.
The existing approved MLO products available on ASX 24 were deemed at the commencement of the scheme in 2019. The full list of approved MLO products is:
| Trading platform | Product | New or deemed product |
| ASX 24 | Base load electricity futures | Deemed |
| ASX 24 | Peak load electricity futures | Deemed |
| ASX 24 | Base load $300 cap | Deemed |
| ASX 24 | Morning peak load electricity futures | New |
| ASX 24 | Evening peak load electricity futures | New |
| TOD Markets | Flat day swap | New |
| TOD Markets | Evening peak swap | New |
| TOD Markets | $300 flat cap | New |
| TOD Markets | $600 flat cap | New |