FMA to Enforce Conduct Standards in NZ ETS Secondary Market
The Financial Markets Authority will enforce new prohibitions on price manipulation and false or misleading conduct in the New Zealand Emissions Trading Scheme secondary market for New Zealand Units under the Climate Change Response Amendment Bill introduced to Parliament on 15 July 2026.
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The Financial Markets Authority will enforce new prohibitions on price manipulation and false or misleading conduct in the New Zealand Emissions Trading Scheme secondary market for New Zealand Units under the Climate Change Response Amendment Bill introduced to Parliament on 15 July 2026.
The Ministry for the Environment confirmed the FMA's expanded role targets gaps in oversight of the largely over-the-counter NZU secondary market. The changes apply conduct standards typical of regulated financial markets to carbon unit trading.
The NZ ETS remains the country's main carbon pricing tool. As of December 2025, 5,417 entities held registration across 6,037 activities. Gross emissions demand reached about 33 million units in 2025. Regulated auction volumes for 2026 stand at 5.2 million units.
NZU spot prices traded in the low $30s in January 2026 before recovering into the $40s by early March. These levels sat well below the 2026 auction reserve price floor of NZD 71, contributing to reduced auction participation and questions over market liquidity.
The Bill brings the NZ ETS closer to standards in the European Union, where the Market Abuse Regulation prohibits insider dealing and market manipulation on auction and secondary markets.
Waiuku Forest, south of Auckland — post-1989 plantations like this generate significant NZU flows into the secondary market now targeted by the FMA's new conduct mandate.
NZU Spot Price Trend, Jan–Mar 2026
Spot prices remained well below the NZD 71 auction reserve floor throughout the period.
Source: Climate Change Commission — NZ ETS unit limits and price control settings for 2027–2031
A Broader Legislative Package
Other provisions move ETS settings decisions to a biennial cycle after the current processes conclude. Territorial authorities must prepare climate adaptation plans for priority high-risk areas. The Bill enables future recognition of non-forestry carbon removals and allows addition of new emissions sources, excluding agriculture, by Order in Council. It also removes routine baseline and eligibility reviews for industrial allocation.
Forestry participants, who generate significant unit flows from post-1989 forests, will face new compliance obligations alongside energy and industrial firms. The FMA's monitoring and enforcement powers add reporting and systems requirements for traders operating at scale.
Policy History and Regulatory Gap
Cabinet decisions on improved market governance date to consultations in 2022 and 2023, with further steps in 2025. The Regulatory Impact Statement highlighted risks of misconduct in the absence of dedicated rules.
The Climate Change Commission will retain its independent advisory role. Treasury and commission analysis during the select committee stage will examine fiscal, emissions and compliance impacts.
The package aims to support credible price signals for decarbonisation while imposing additional regulatory layers on market participants.
