TOCOM Improves Block Trading by Including Commercials as Eligible Trading Parties

12.27.2010

 

Tokyo Commodity Exchange Inc. (“TOCOM” or the “Exchange” hereafter) announced today that the Exchange added Commercials as eligible trading parties of Block Trading after having received approval from the Minister of Economy, Trade and Industry on December 24, 2010. Block Trading, whose advantage is that large orders can be executed entirely at a single price, is expected to provide an effective hedging tool for Commercials.

In February 2010, TOCOM introduced Block Trading that is defined as exchange-traded trading where transactions are concluded apart from the market. Although the eligible trading parties were initially limited to investors involved in investment funds and ETFs, the Exchange has been working to promote utilization of the particular type of transaction by adding other groups of trading participants to the eligible trading parties.   

With this expansion of Block Trading eligibility, the Exchange expects to alleviate concerns held by Commercials over market price impact and incomplete execution when they hedge with futures against their cash transactions. TOCOM made this change aiming at enhancing market convenience for Commercials and to increase liquidity.

 [Outline of Block Trading by Commercials at TOCOM]

Minimum Quantity per Application per Commodity /Contract Months / Series

- Precious Metals Market:   30 Contracts

- Oil Market:         20 Contracts
- Chukyo-Oil Market:      20 Contracts
- Rubber Market:          20 Contracts
- Nikkei-TOCOM Commodity Index Futures Market: 20 Contracts

Available Contract Months/Series

Four the nearest contract months in Futures, all Options series and all Contract Day Transactions

Price

- Settlement price on the same clearing period
- The price between high and low on the same clearing period
- The price that is appropriate and reasonable in view of the market circumstances
(e.g., the indicative price in case of no executions during the session )

Application Time Period

From 17:00 until 4:15, and from 8:30 until 15:45 (JST)

 

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