Kick-off for much-anticipated platinum rolling spot futures

The Platinum Rolling Spot Futures contract has been well received by market participants including the investors who trade foreign exchange products on margin. It trades with no maturity date and positions roll daily, making it the sister contract of the top-listed Gold Rolling Spot Futures contract, which launched in May 2015.

The Platinum Standard contract was listed at TOCOM in 1984, and Platinum Mini was added in 2008 to serve needs of smaller investors. Platinum Rolling Spot was designed to meet the needs of investors who trade similar foreign exchange and financial products, providing a new approach to precious metals investing.

Platinum investment attributes

All the platinum that has ever mined is said to be approximately 5,100 tons, which is just over 3 percent of total gold production. Scarcity is a significant attribute of this precious metal. In 2015, global production of platinum was 191.5 tons, far less than the 3,158 tons for gold and 26,531 tons for silver. More than 70% of supply originates in South Africa, with the second largest being Russia, with about 15%. The largest single use for platinum is for automotive catalytic converters that reduce nitrogen oxide emissions. Together with other industrial applications, such as fuel cells, chemical production and glass production, 61% of platinum is used in manufacturing, with 32% going to jewelry.

Platinum supply and demand is considered to be influenced by: Socio-economic trends in South Africa; Russia’s foreign currency policy; auto emissions regulation; economic performance of consuming nations; and innovations in fuel cell technology. At TOCOM all products, including platinum are denominated in JPY, making foreign exchange trends is another factor.

Theoretical Platinum Spot Price

Platinum Rolling Spot prices, which represent the platinum spot prices, are based on theoretical spot prices calculated from TOCOM’s Platinum Standard contract. The theoretical spot price is published in five-minute intervals on the TOCOM website.

TOCOM / NY Platinum Prices since 1997

Benefits of Platinum Rolling Spot

No maturity Since there is no contract expiration, positions can remain open indefinitely, providing greater flexibility.
Cross margin savings Those offsetting risk with TOCOM’s Platinum Standard (1kg) or Platinum Mini (100g) futures may enjoy significant margin reduction.
Physical delivery options Settlement by physical delivery is available to all participants by using Exchange of Futures for Physicals (EFP) or Delivery on Request.
Covers Asia, Europe and U.S. trading Platinum Rolling Spot Futures are available at TOCOM from trading hubs around the world for nearly 20 hours each business day.
Inter-commodity spread trade Platinum – gold spread trading (inter-commodity SCO) is available. Platinum has traditionally traded at a premium to gold due to smaller supplies, though this has inverted in recent years.

TOCOM Platinum and Gold Prices

Spread between Platinum and Gold Prices at TOCOM

Price Information

TOCOM Product Code:
19

Platinum Rolling Spot Futures Contract Specifications

Date of Listing March 21, 2017 (Day session)
Type of Trade Cash-settled Futures Transaction (Rolling Spot Futures)
Standard Platinum of minimum 99.95% fineness
Trading Method Computerized Individual Auction
Settlement Price Theoretical spot price
Underlying Instrument Theoretical spot price* of platinum with minimum 99.95 % fineness
* Theoretical spot price is calculated as follows:
First, the Forward Rate is calculated using the settlement prices of the first contract month and the sixth contract month of the Platinum Standard.
Then, taking the number of days remaining until the expiry into consideration, the theoretical price is calculated from the settlement price of the first contract month, using the Forward Rate.
However, on the last trading day of the first contract month, the settlement prices of the second and the sixth contract months will be used to calculate the Forward Rate.
Contract Term One Clearing Period (Rolling Spot Futures)
Rolling Spot Futures Transaction Rolling Spot Futures is a type of transaction which is established during the session in a given Clearing Period or as a result of the roll-over process executed at the close of the session for the Clearing Period immediately preceding said given Clearing Period, and closed through an offsetting resale or repurchase or as a result of the roll-over process executed at the close of session in the Clearing Period in which the position was established.
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 Price Increment 100 grams (approximately 3.215 troy ounces)
JPY 1 per gram (tick value: JPY 100)
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 4:30p.m.) 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.
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 may be established.

References