The Ministry of Agriculture is considering five different options for the Dairy Industry Restructuring Act to allow Fonterra to introduce share trading.
Last year the co-operative's 10,500 shareholders voted in favour of a capital restructuring change to allow trading in shares among themselves.
It will allow them to buy and sell Fonterra shares with one another through a market, rather than through the co-operative.
The change requires an amendment to DIRA, the 2001 legislation that ensures that Fonterra remained competitive and allowed farmers to enter and exit the cooperative.
MAF says the Government needs to ensure that the sharetrading will provide a sufficient liquid market and an efficient milk price for farmers.
Sector regulation manager Andrew Hume says this will allow shareholders to trade their shares in a timely manner and at competitive prices.
MAF has issued a consultation document that has five different options to allow trading among farmers.
"We think that TAF could substitute could subsitute for the current regulations," he said.
Submissions on the proposed amendments close on 7 March.