Tokyo Commodity Exchange, Inc, Japan’s largest and one of the most prominent commodity futures exchanges in Asia (“TOCOM” or the “Exchange” hereafter) today extends trading hours for the night session until 4:00 (JST). Until the previous trading day, TOCOM’s trading hours continued from 17:00 to 23:00 (JST) for the night session and from 9:00 to 15:30 (JST) for the day session. The extended trading hours apply for the Precious Metals, Oil and Index markets. The Rubber market is excluded and closes at 19:00 (JST). The Exchange aims to offer more trading opportunities to market participants, for the overall convenience of the market, by keeping its market open longer, and expects to increase the volume in the region of 10,000 and 20,000 contracts.
TOCOM’s listed products, which include Gold, Platinum, Crude Oil and Kerosene, are internationally traded commodities and their prices fluctuate after TOCOM’s market closes at 23:00 (JST). Around that time, the price fluctuation tends to get activated in response to exchange rate fluctuations and other economic events in the U.S. and Europe. The dollar-yen exchange rate is thought to be one of the factors that contributes to increasing gold trading volumes, Consequently, TOCOM considered extending the night session beyond 23:00 (JST) and allowing market participants to trade on a more timely manner in response to such market movements, since this is an important mission for an exchange today.
One of the other reasons for extending the trading session beyond 23:00 is because the overlap in trading hours with the New York market could greatly benefit arbitrage traders. With the launch of the current trading system in May 2009, TOCOM commenced the night session, which overlapped with most of the daytime trading hours in London. With the trading hours extension of today, it becomes more convenient for market participants around the world to arbitrage between London, New York and Tokyo (see the below chart “Trading hours at world’s major derivatives exchanges”). Market participants in Europe and the U.S., in particular, are able to trade on the TOCOM markets during their daytime trading hours. TOCOM expects that this measure would greatly push forward its efforts for promoting its markets among overseas market participants.
[ Trading hours at world’s major derivatives exchanges ]
Additionally, the extension of trading hours contributes to increased convenience of the market for individual investors. Generally speaking, between 21:00 and 1:00 (JST) individual investors are also relatively active in trading FX and CFD over the internet. Therefore the Exchange aims at encouraging such investors to enter into commodity futures trading by keeping the markets open during these times.
Tadashi Ezaki, President & CEO of TOCOM said, “We position this extension in trading hours as the top priority in our action plan for recovering trading volume after the launch of the current trading system. We continuously endeavor to improve convenience of our market in order to attract a wider variety of market participants, particularly from abroad.” Trading hours’ extension follows a series of developments to improve access for global market participants. This includes the demutualization of the exchange in 2008, the introduction of a new trading system, remote trade membership and a market maker program in 2009, and the listing of commodity index futures this past March. TOCOM continues to make efforts such as introducing direct market access as well as adopting trading rules in line with global standards such as block trading.