Important Contract Specification Changes Affecting Nikkei-TOCOM Commodity Index Futures

2011.2.18

Tokyo Commodity Exchange, Inc.

In response to deteriorating market liquidity of the Nikkei-TOCOM Commodity Index Futures (TOCOM NEXT), TOCOM will change the contract specification of the contract (For details, click here), replacing the Contract Day Transaction (i.e: a contract without expiry) by an ordinary type of futures contract (futures contract with expiry), provided that said change be approved by the Minister/Ministry of Economy, Trade and Industry of Japan.

As a consequence of this change, the Contract Day Transaction will be terminated at 15:30 on February 29th, 2012, with all remaining positions closed as they are settled against Settlement Index Point for the day.

In this regard, customers who have outstanding positions, or plan to trade Nikkei-TOCOM Commodity Index Futures, are strongly advised to be aware of the following points and take necessary actions when appropriate.

1. Key Points of the Change

(1) Contract Day Transaction will be terminated at 15:30 on February 29th, 2012.
All remaining positions will be automatically settled against the Settlement Index Point (*) for the day.
* Settlement Index Point is an Index point calculated based on settlement prices of the underlying commodity futures contracts at the end of day session (15:30),

(2) Futures (with expiry) transaction will be launched on May 2nd, 2011, when March 2012 contract is generated.
(For details, click here)

2. Points to remember when you trade Nikkei-TOCOM Commodity Index Futures

(1) For those customers with outstanding positions of Nikkei-TOCOM Commodity Index Futures:
Please be aware that you will not be able to retain any position once the Contract Day Transaction is terminated at 15:30 on February 29th, 2012. In the wake of this news, the market liquidity of Nikkei-Commodity Index Futures can be expected to further decrease as we move closer to the termination of Contract Day Transaction, which might increase volatility of the market and incur unforeseeable losses.
With this in mind, please keep alert of market conditions and take necessary action when appropriate.

(2) For those customers planning to trade Nikkei-TOCOM Commodity Index Futures:
It is recommended to wait until May 2nd, 2011, when the revised Nikkei-TOCOM Commodity Index Futures contract with expiry is to be launched, before starting to trade.
If you still wish to trade Contract Day Transaction before May 2nd, 2011, please bear in mind the potential risk factor stated in (1) above when you trade.

 

Thank you for your understanding and careful attention to this matter.

 

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