Improved Contracts, Renewed Popularity

TOCOM Dubai crude oil futures saw a significant growth in 2015, reaching 3,651,528 contracts, four times larger than the previous year.

Factors behind this includes (1) oil prices becoming extremely volatile amid global oversupply, economic slowdown and geopolitical tensions in the Middle East; (2) the change to Dubai crude oil as the sole underlying product, which is convenient for commercial participants; and (3) strong volume of an ETN tracking TOCOM Dubai Crude Oil prices, which prompted active hedging.

We see our TOCOM Dubai Crude Oil contract winning stronger recognition as a Middle East oil benchmark.

TOCOM Dubai Crude Oil Futures Price/Volume Trends (Dec.2014-May 2016)

Change of Contract Specs to Better Aligned with Industry

TOCOM Crude futures now use Dubai crude as its sole underlying product (beginning with the June 2015 contract). Previously, crude oil futures settled with the monthly average of Platts Dubai and Oman prices.

This change better aligned the contract with the practices of the Japanese petroleum trading community, where Dubai crude oil prices are more widely accepted as the benchmark.

Elimination of Position Limits (effective on June 1, 2015)

Following the significant growth in crude oil futures, TOCOM has received numerous requests from market participants to relax position limits, which would allow for more trading.

The Exchange responded to these requests by removing limits on Dubai crude as of June 1, 2015, as a part of the Exchange’s ongoing efforts to improve market usability .

TOCOM Dubai and Double-Bull ETN

The Nikkei-TOCOM Crude Oil Double Bull ETN, created by Nomura Securities and listed on JPX, uses the TOCOM Crude Oil Leverage Index and has a volatility ratio of 2:1, moving twice as much as the TOCOM Crude Index. The contract gained popularity among Japanese retail investors. The number of outstanding beneficiary rights of the ETN has risen to 100 million units.

NEXT NOTES: Nikkei-TOCOM Crude Oil Double Bull ETN (JPX code 2038)

Created by Nomura and listed on JPX, the product uses the TOCOM Crude Oil Leverage Index and has a volatility ratio of 2:1, moving twice as much as the TOCOM Crude Index.

The issuer uses TOCOM futures to hedge its exposure. As the ETN becomes more active, TOCOM Dubai crude oil futures volume is growing.

Price Information

TOCOM Product Code:
33
Reuters Contract Detail:
TCE/JCO
Bloomberg Ticker:
CPA

TOCOM Dubai Crude Oil Futures Contract Specifications

Date of Listing September 10, 2001
Type of Trade Cash-settled Futures Transaction
Type of Crude Oil Middle East crude oil (The value of Dubai which acts as the benchmark price of Middle East crude oil.)
Trading Method Computerized Individual Auction
Contract Months Six consecutive months (On the day when a new contract month is generated, there will be six consecutive months starting from the month which the day belongs to.)
Last Trading Day Day session on the last business day of the current contract month.
First Trading Day of a New Contract Month Day session on the next business day of the Last Trading Day of the current contract month.
Final Settlement Day A business day following the Last Trading Day of the current contract month.
Final Settlement Price Yen-based monthly average value of Dubai calculated by the Exchange based on the prices reported by a price information vendor (as a general rule, platts)
Trading Hours Day Session Opening Call Auction (Ita-awase): 8:45 a.m. (JST)
Continuous Trading (Zaraba): 8:45 a.m. to 3:10 p.m. (JST)
Closing Call Auction (Ita-awase): 3:15 p.m. (JST)
Night Session Opening Call Auction (Ita-awase) : 4:30 p.m. (JST)
Continuous Trading (Zaraba) : 4:30 p.m. to 5:25 a.m. of the following morning (JST)
Closing Call Auction (Ita-awase) : 5:30 a.m. of the following morning (JST)
Contract Unit 50 kl (approximately 314,5 barrels)
Price Increment JPY 10 per 1 kiloliter
Circuit Breaker Trigger Level
(Static Circuit Breaker (SCB) Level)
The SCB trigger level is to be set everyday at the start of a new clearing period (i.e.the start of a night session at 4:30 p.m. (JST)) and is based on the settlement price of the previous clearing period (or the settlement price of the preceding contract month, in case of a new contract month)
Immediately Executable Price Range (Dynamic Circuit Breaker (DCB) Level) The DCB trigger level is to be set based on DCB Reference Price (the last traded price, in principle)
Margin The SPAN Margining System applies.
Position Limits Position limits are not applicable; however, if it is deemed necessary by the Exchange, a limit on positions will be established.

References