Japan s Comprehensive Commodity Exchange

Transcription

1 Corporate Profile

2 Greetings Japan s Comprehensive Commodity Exchange Japan s Comprehensive Commodity Exchange As Japan s leading commodity market, TOCOM has been at the forefront of innovating Japan s commodity derivatives industry since its establishment in TOCOM, successor of the Tokyo Textile Exchange, merged with Tokyo Rubber Exchange and Tokyo Gold Exchange in This merger resulted in a single exchange handling a diverse set of industry-oriented commodities. Greetings TOCOM is focused on improving market convenience and increasing participation. The Exchange is responding to a challenging environment by revamping its market structure, installing a globally-accessible trading system, revamping rules and rolling out new products. As Japan s leading derivatives exchange and a vital component of Japan s economic infrastructure, TOCOM has worked for over thirty years to expand and modernize the commodity market to meet the need of international investors. TOCOM serves as a forum for the price discovery process and also provides a valuable service to participants who wish to hedge and manage risk. TOCOM handled 98.6% of all commodity futures transactions conducted in the country in Having taken over agricultural contracts from the Tokyo Grain Exchange in 2013, TOCOM offers a comprehensive product suite. These efforts are yielding some positive results. To name a few, new TOCOM remote trade members and JCCH general clearing members have recently joined. And ETFs and ETNs that track TOCOM prices are attracting investors. To capitalize on our newfound momentum we have given priority to three initiatives. Firstly, we will establish a base of operations that stabilizes revenue growth. We will aim to be a more comprehensive commodity market that extends beyond futures to include OTC and physical products. Breakdown of TOCOM s Volume [January October, 2015] Secondly, we plan to develop a comprehensive energy product line centered on electricity futures and LNG. With an eye on the liberalization of the retail electricity market in 2016, TOCOM intends to launch electricity futures contracts that are based on a Council on Electricity Futures Market report written for the Ministry of Economy, Trade and Industry. Thirdly, we will increase collaboration with other exchanges, including the Japan Exchange Group. And we will make concerted efforts to establish cooperative ties with mainland Chinese exchanges, recognizing the importance and growth potential of commodity trading in Asia. Global Benchmark price of Rubber Rubber 9.9% Corn 2.0% Soybeans 0.7% Azuki 0.1% Benchmark price in East Asia TOCOM is a commodity exchange operating under government oversight and is a vital component of Japan s economic infrastructure. At the same time, our market serves many global participants in trading and managing risk in the Asian time zone. We will continue to do our best to strengthen the commodity market and contribute to the economic development of Japan. We intend to make TOCOM more competitive through the steady implementation of the aforementioned initiatives and related action plans. Takamichi Hamada President & CEO Tokyo Commodity Exchange, Inc. Gasoline 7.4% Crude Oil 13.8% Kerosene 1.8% Platinum Mini 1.3% Palladium 0.3% The most liquid Platinum market in the world Total million contracts Silver 0.3% Platinum Standard 16.1% Gold Standard 33.4% Gold Mini 5.4% Gold Daily 7.5% 1

3 Attracting Global Market Participants to Asia s Most Accessible and Transparent Commodity Market Attracting Global Market Participants to Asia s Most Accessible and Transparent Commodity Market TOCOM caters to the evolving needs of the global trading community while following the international regulatory environment. We have built ties with major exchanges around the world and are being recognized as Asia s leading commodity futures exchange. Our long-standing commitment to exceeding global standards has led to regulatory approval to provide direct market access from Dubai, Hong Kong, Singapore and the U.S.A. These approvals demonstrate the integrity and reliability of our market, our customer protections and strong enforcement of rules and regulations. TOCOM has steadily expanded and reinvented its commodity futures market with commodities that meet specifi c needs. TOCOM stands shoulder to shoulder with the world s top exchanges, serving global market participants with streamlined market access. We have developed ties with overseas exchanges and are developing innovative products and services. In addition, we have continuously extended trading hours and updated rules and regulations to improve market usability. As a result, overseas participation in TOCOM s market is glowing signifi cantly. We continue to invest in our market infrastructure to stay a step ahead. Market Participation from Abroad Continues to Increase at TOCOM (Unit: Thousand contracts) 2,500 International Customer Trades Ratio Against Total Trades 2,000 1,500 1, % 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 2 3

4 Global Benchmark Commodity Pricing TOCOM Listed Products Global Benchmark Commodity Pricing The commodity futures market is designed to shape fair and transparent prices that fluctuate with political, economic, industrial and other developments. TOCOM lists gold, rubber, crude oil and other globally traded commodities, providing the world with price discovery. Global commodity markets are divided into the three regions of North America, Europe and Asia, each using different benchmarks. The prices formed on the TOCOM Gold, Rubber and Crude Oil markets are considered benchmarks. Gold is traded around the clock on spot and futures markets, with active arbitrage maintaining high price correlations. Trading is concentrated in different regional markets, shifting between Tokyo, London and Chicago/New York. Since TOCOM attracts a high level of liquidity, its Gold price is widely recognized as the benchmark in Asia. Asia serves as the global center for rubber trading. Among rubber futures contracts listed in several Asian commodity exchanges, TOCOM rubber plays a unique role in providing a reference price for producers, traders and manufacturers in Thailand, Malaysia and Indonesia. The global oil market consists of the three regions of North America, Europe and Asia. Each of the regions has separate crude oil benchmark: NYMEX s WTI in North America, ICE s Brent Crude in Europe, and TOCOM s Dubai Crude Oil in Asia. Crude oil futures prices have a major infl uence on crude oil transactions worldwide. Fluctuations in the price of Dubai crude are followed closely by the rest of the world, since it affects crude oil price trends in Asia. TOCOM Listed Products Gold Standard Gold of minimum 99.99% fi neness (1kg / contract) Gold Mini 1/10th the size of the Gold Standard contract (100g / contract) Gold Daily Gold of minimum 99.99% fi neness (100g / contract) Gold Options Options transactions based on gold futures as the underlying asset Silver Silver of minimum 99.99% fi neness (10kg / contract) Platinum Standard Platinum of minimum 99.95% fi neness (500g / contract) Gasoline Regular Gasoline of JIS K2202 Grade 2 with maximum permissible sulfur content of 10ppm (50kl / contract) Kerosene Kerosene of JIS K2203 Grade 1 (50kl / contract) Gas Oil Gas Oil of JIS K2204 (50kl / contract) Chukyo-Gasoline Regular Gasoline of JIS K2202 Grade 2 (10kl / contract) Chukyo-Kerosene Kerosene of JIS K2203 Grade 1 (10kl / contract) Rubber Ribbed Smoked Sheet (RSS) No.3 (5tonnes / contract) TOCOM not only serves as the primary Asian commodity exchange, but is also an international market linked to those in North America and Europe. Platinum Mini 1/5th the size of the Platinum Standard contract (100g / contract) Palladium Palladium of minimum 99.95% fi neness (500g / contract) Soybean GMO, GMO mixed and GMO nonsegregated No.2 or better yellow soybeans produced in the USA (10,000 kg / contract)* Azuki (Red Bean) Grading standard No.2 azuki produced in Hokkaido, Japan (2,400kg/80bags / contract) Dubai Crude Oil Middle East crude oil (The value of Dubai which acts as the benchmark price of Middle East crude oil.)(50kl / contract) Corn No.3 yellow corn produced in the USA (not cleared through customs) (50,000 kg / contract) *25,000kg per contract from April 2016 contract month onward. 4 5

5 Customer Convenience through Innovation Customer Convenience through Innovation Robust Technology Globally Accepted Trading Platform All TOCOM products are traded continuously on an electronic platform. Since the launch of its fi rst electronic platform in 1991, TOCOM has relentlessly upgraded and increased capacity to meet the requirements of market participants around the world and adjust to their evolving needs. TOCOM s current trading platform is CLICK, which is provided by Nasdaq. It has catered to the need of the international trading community through world class performance and functionality since TOCOM will use the new Nasdaq derivatives trading system which Japan Exchange Group (JPX) is working to adopt in 2016, aiming at improving convenience by offering a common platform for fi nancial derivatives and commodity futures trades. The new system will also provide further enhanced performance and reliability. Along with this transition, rules and regulations will also be updated to bring new trading opportunities to investors around the world. Tokyo Singapore/ Hong Kong London* New York* * Daylight saving time 16 TOCOM Open For Business... Everywhere Since September 2010, TOCOM has offered nearly 18 trading hours per day, including the night session that closes at 4:00 JST*. This extended our overlap with other major exchanges, facilitating arbitrage trading providing more liquidity :30-04:00 DAY 09:00-15:15 SESSION 15:30-03:00 08:30-20:00 03:30-15: * Rubber market closes at 19:00 JST. NIGHT SESSION :00-14: :00-07: :00-02:15 Commitment to Establishing Reliable, Convenient and Competitive Markets Beyond technological advancements, TOCOM is committed to advancing its market environment with a reliable, customer-focused competitive market. We continue to closely communicate with market participants to improve our marketplace Market Maker Program Position Limits Increase for Investment Trusts Proprietary Trading Firms Eligible for Membership Remote Trade Membership 2010 Block Trading New Listings: Gas Oil Market, Chukyo-Oil Market 2011 Tokyo Grain Exchange Products Migration on TOCOM Platform Error Trade Policy Amendments on Give-up System 2012 Full Ownership of Japan Commodity Clearing House 2013 Agricultural Product & Sugar Market Launch New Listings: Soybean, Azuki, Corn and Raw Sugar 2014 Posted Settlement Transaction Introduced 2015 Gold Daily Futures Launched 7

6 Trading on the TOCOM Market Trading on the TOCOM Market The Exchange can be accessed through any of TOCOM s Broker Members. If the Broker Member works with an ISV, truly seamless trading can be achieved. A Futures Commission Merchant (FCM) can also provide access when they work with a Broker Member. Another way to participate is to obtain TOCOM membership in one of six categories: 1. Broker Members: Broker Members hold a Commodity Derivatives Business Operator license (i.e. FCM) and can perform proprietary trading and brokerage business with direct access to TOCOM s markets. Broker Members must be a Japanese entity. 2. Remote Broker Members: Remote Broker Members are foreign entities that are equivalent to Commodity Derivatives Business Operators (i.e. FCMs) in the country where they are located. They can conduct proprietary trading and broker business with direct access to TOCOM s markets. Customer Affiliate Member Associate Member Trade Member Remote Trade Member* Accessing TOCOM Order Remote Broker Member * Foreign FCM Broker Member 3. Trade Members: Trade Members can conduct proprietary trading with direct access to TOCOM s markets. Trade Members must be a Japanese entity. *TOCOM has received regulatory approvals for providing Direct Market Access to market participants in the U.S.A., Singapore, Hong Kong and Dubai. 4. Remote Trade Members: Located outside of Japan, Remote Trade Members are eligible to conduct proprietary trading with direct access to TOCOM s markets.* 5. Affiliate Members: Affi liate Members are eligible to trade through Broker Members to access TOCOM s markets. Affi liate Members can be a Japanese or foreign entity. 6. Associate Members: Associate Members are eligible to conduct trading with access to the TOCOM market through Broker Members. Associate Members must be a foreign entity and member of an overseas exchange or trade association which deals with a commodity listed on the TOCOM markets. * Although a business location in Japan is not a requirement, a Remote Broker Member and a Remote Trade Member must designate its clearing broker, or its representative in Japan pursuant to the Companies Act, as an Agent for Service of Process. These two types of Members also need to conclude a clearing agreement with its clearing broker. 8 9

7 Reliability Is Our Priority Reliability Is Our Priority Market Surveillance Rigorous market surveillance is vital to a secure, sound market. It supports credible price formation in a rapidly evolving electronic trading environment. TOCOM strives to eliminate fraudulent trading and prevent market abuse, such as price manipulation, through consistent oversight of market conditions and member fi rm transactions. TOCOM also oversees member compliance with the law and exchange rules. To these ends, TOCOM carries out real-time market surveillance. Experienced exchange staff use sophisticated electronic market monitoring systems, such as SMARTS to detect suspicious transactions. The system helps analyze records of trades, orders and cancelled orders. This allows for advanced trading surveillance on a real time basis. Employing both monitoring and electronic technology, we scrutinize unusual orders and trade behavior to track down abusive or dubious trades. Risk Management The Japan Commodity Clearing House (JCCH) was established in May 2005 as an independent clearing house that integrates the clearing operations of all Japanese commodity exchanges, including TOCOM. JCCH is the sole counterparty for all settlements. As the sole counterparty, JCCH minimizes the risk of default to all market participants and enhances market integrity. Under this central clearing model, JCCH also provides the effi cient management of clearing funds and the streamlining of back offi ce operations for all clearing participants. In January 2011, JCCH adopted the SPAN (Standard Portfolio Analysis of Risk) Margining System, allowing market participants to offset risks between correlated positions, which enhances margining effi ciency. SPAN is widely utilized for portfolio risk assessment by exchanges, clearing organizations and end-users such as FCMs and brokerage fi rms. Its adoption contributes to enhancing the stability of Japan s commodity market. Self-Regulation The Commodity Derivatives Act (CDA) of Japan requires commodity exchanges to conduct self-regulatory activities in order to insure the fairness of transactions on commodity markets and to protect customers. The Exchange has, pursuant to the provisions of the CDA, established a Selfregulatory Committee to: 1) As an organization operating both with a public mission and a profi t-seeking corporation, insure proper governance and; 2) to properly conduct self-regulatory activities. Self-regulatory activities include the examination of the qualifi cations of Members, examination of trades, investigation of the status of compliance by Members with laws and regulations and the rules of the Exchange, and sanctions and other dispositions against Members. TOCOM acquired full ownership of JCCH in December The Exchange intends to further improve clearing house effi ciency and its integration with the market. Japan Commodity Clearing House Co., Ltd. (JCCH) Date of Incorporation: December 24, 2004 Commencement of Operations: May 2, 2005 Business Outline: To provide clearing and settlement services for the transactions of all commodity exchanges in Japan (On April 25,2005 JCCH got permission from the two competent ministries, which are MAFF(Ministry of Agriculture, Forestry and Fisheries) and METI(Ministry of Economy, Trade and Industry)) Clearing Process Transaction at TOCOM Clearing at JCCH Transaction executed Transaction data sent to JCCH Novation Netting Clearing 10 11

8 TOCOM Expanding Our Horizons TOCOM Overview TOCOM Expanding Our Horizons TOCOM Overview TOCOM s expansion plans include broadening its energy product suite, which will support Japan s economy, and in particular, the utility industry. Recently adopted energy policies in Japan will open the door for TOCOM to develop a comprehensive energy market. First on the agenda is electricity futures. Japan s Electric power companies and related industries are interested in the establishment of a futures market. The retail power market will be fully liberalized in 2016 and electricity futures can provide power producers and commercial consumers with an important hedging tool. In addition, futures may act as a pricing benchmark for the industry and aid in making business decisions. Liquefi ed natural gas (LNG) futures is next in the pipeline. Long-term LNG import prices in Japan have been based on crude oil. There is growing demand to change this pricing mechanism. As such, TOCOM established the Japan OTC Exchange (JOE) in 2014 and provided a platform for petroleum products, including LNG. TOCOM is looking to support spot LNG trading with a marketplace that provides transparent market prices for buyers and sellers. Since OTC and futures markets are complimentary, an actively traded OTC market will generate needs for hedging on a futures market. TOCOM is poised to serve such needs. Corporate Profile Corporate Name Office Location Tokyo Commodity Exchange, Inc. (TOCOM) Nihonbashi Horidomecho, Chuo-ku, Tokyo Japan Phone: (Switchboard) (as of November 2015) Foundation February, 1951 (Date of the foundation of the Tokyo Textile Exchange, which merged with the Tokyo Rubber Exchange and the Tokyo Gold Exchange to become the Tokyo Commodity Exchange Principal Business Objectives To open and operate commodity markets necessary for dealing in futures of the commodities listed on the markets based on the Commodity Derivatives Act Stock Capitalization Billion yen Corporate History 1951 February Tokyo Textile Exchange founded in Nihonbashi Horidome-cho, Chuo-ku, Tokyo 1952 December Tokyo Rubber Exchange founded 1982 February Tokyo Gold Exchange founded 1984 November Tokyo Textile Exchange merged with the Tokyo Rubber Exchange and the Tokyo Gold Exchange into the Tokyo Commodity Exchange (TOCOM) 1991 April Continuous trading on electronic platform started 1999 July Oil market launched, gasoline and kerosene listed 2001 September Crude oil listed 2003 January 2nd generation electronic trading platform introduced June In-house clearing house established T + 1 (one day after transaction) settlement introduced July Connection to ISVs started for facilitating the order placement from overseas 2004 May Gold options launched December Auction trading fl oor abolished 2005 May Market surveillance system, SMARTS introduced 2006 July Daily publication of TOCOM Index started 2007 July Gold Mini launched 2008 December Demutualized from non-profi t membership organization to for-profi t stock company 2009 May New trading system launched based on Nasdaq OMX s trading platform Night session (17:00-23:00 JST for all products except Rubber, 17:00-19:00 for Rubber) started 2010 September Trading hours extended until 4:00 JST for all products except Rubber October Chukyo-oil market launched 2011 January SPAN introduced at JCCH Commodity Derivatives Act enforced Tokyo Grain Exchange products migrated to TOCOM trading platform 2013 February Agricultural Product & Sugar market launched, listing soybean, azuki, corn and raw sugar 2013 February Agricultural Products and Sugar market launched listing soybeans, azuki beans, corn and raw sugar November Established Japan OTC Exchange, Inc. (JOE), a joint venture with Ginga Energy Japan, Inc., to provide an OTC trading platform 2014 June JOE established Facilities Similar to Specifi ed Commodity Markets for RIM Swap and TOCOM Swap and started operations September JOE established Facilities Similar to Specifi ed Commodity Market for LNG and started operations 2015 January Granted Registration as Foreign Board of Trade (FBOT) by the Commodity Futures Trading Commision (CFTC) May Gold Daily Futures launched 12

9 Nihonbashi Horidomecho, Chuo-ku, Tokyo Japan Phone: Printed in Japan 2015