The Tokyo Commodity Exchange (TOCOM) is a commodities futures exchange in Japan. In this guide, you’ll learn more about TOCOM, what you can trade on it, and how it’s regulated. We also give answers to some commonly-asked questions about the exchange.
Contents
What is the Tokyo Commodity Exchange?
The Tokyo Commodity Exchange (TOCOM) is a commodity futures exchange that operates electronic markets for trading futures and options on a range of energy commodities.
TOCOM is now part of the Japan Exchange Group (JPX). In July 2020, the transfer of futures and options on precious metals and agricultural products from TOCOM to the Osaka Exchange (OSE), another JPX-owned exchange, took place.
This move signaled one of the final stages of the JPX’s transition to a comprehensive exchange. It also coincided with the integration of the Japan Securities Clearing Corporation (JSCC) and the Japan Commodity Clearing House (JCCH).
What Can You Trade on TOCOM?
Up to July 2020, TOCOM operated marketplaces for precious metals, oil, rubber, and agricultural soft commodities.
Futures and options contracts were available to trade on gold, silver, platinum, palladium, crude oil, gasoline, kerosene, natural rubber, soybeans, corn, and azuki.
After the mergers and transfer of commodities, TOCOM is now only offering trading of the following products in the energy and Chukyo oil markets:
- Gasoline
- Kerosene
- Gas oil
- Dubai crude oil
- Electricity
- Chukyo gasoline
- Chukyo kerosene
TOCOM uses the New J-GATE trading platform for seamless integration with the rest of the JPX Group’s trading systems.
How is TOCOM Regulated?
TOCOM oversees the regulation of the exchange, and in that role, functions as a self-regulatory organization (SRO).
The Financial Instruments and Exchange Act in Japan sets forth the process for self-regulation and the establishment of a self-regulatory committee. (SRC).
An SRC must be composed primarily of outside directors to ensure that it’s independent of the trading, clearing, and other operations of the exchange.
The COCOM SRC has the power to make decisions on matters concerning self-regulation. TOCOM has also established a department in charge of self-regulation to support the SRC.
TOCOM self-regulatory functions cover the following three areas:
| Regulatory Function | Description |
|---|---|
| Examination of Members’ Qualifications | The period of examination of new members’ qualifications covers about three months. The process takes place as follows:
|
| Sanctions Against Members | If the exchange suspects that a member has violated laws and regulations or the rules of the exchange, the SRC decides the specific sanctions to be imposed. The process takes place as follows:
|
| Examination of Trades and Trade Practices | TOCOM monitors all transactions carried out in the markets of the exchange, and investigates the status of transactions and price trends to detect unfair trade practice, including market manipulation. |
Traders can consult TOCOM’s compliance and self-regulatory sections to learn more about each of these regulatory functions and to see examples of the following:
- Explanations of unfair trading under the Commodity Derivatives Act.
- Examples of trade practices that might trigger actions by the exchange.
- Explanations of trade practice surveillance techniques.
- Case studies of unfair trading.
Brief History of TOCOM
TOCOM was established in 1984 as the result of the merger of three exchanges:
- Tokyo Textile Exchange – 1951
- Tokyo Rubber Exchange – 1952
- Tokyo Gold Exchange – 1982
In 2019, the JPX conducted a tender offer for TOCOM’s issued shares after which the exchange was converted into a wholly-owned subsidiary of JPX.
FAQs
We’ve put together some answers to commonly-asked questions about TOCOM.
What Type of Memberships Does TOCOM Offer?
TOCOM offers the following classes of memberships:
| Membership Category | Monthly Membership Fee |
|---|---|
| Broker Members | JPY 60,000 per market division |
| Trade Members | JPY 50,000 per market division |
| Remote Broker Member | JPY 50,000 per market division |
| Remote Trade Member | JPY 50,000 per market division |
| Affiliate Member | JPY 10,000 per market division |
TOCOM does not require a member to have a business location in Japan. The exchange has regulatory approval to provide direct market access to market participants in the United States, Singapore, Dubai, and Hong Kong.
However, remote brokers and remote trade members must designate their clearing brokers as agents for service of process.
What Are TOCOM’s Margin Requirements?
The Japan Commodities Clearing House (JCCH) establishes rules concerning margin requirements for TOCOM customers.
Beginning in 2011, the JCCH began using the proprietary SPAN margin model developed by the Chicago Mercantile Exchange (CME).
The model relies on historical volatility and price fluctuations to determine margin requirements for positions. Traders can find additional details in the JPX’s margin rules.
What Market Data Does TOCOM Make Available?
TOCOM provides a variety of market data and news feed options for its clients, including the following:
- Quotes for individual products
- Quotes for all products by trade date – Previous five days of historical price data for each TOCOM listed product.
- Quotes for all products by session – Previous five days of historical price data organized by trading session (day session or night session).
- Spread market (calendar) – Trade data for each expiring month of futures contracts.
- Periodic quotes for all products by trade date (futures) – Quotes for each expiration month for futures contracts.
- Trading volume and open interest – Includes each commodity and expiration month
- Miscellaneous categories – Other data TOCOM makes available includes the following:
- Open interest by category
- Top 10 volume by member
- Month-End open interest
- Concentration of positions held by large traders
- Market structure analysis
TOCOM makes comprehensive historical market data available in a variety of different file formats. Traders should consult the historical data section for a complete menu of formats.
Does TOCOM Have Vendor Partners?
Beginning in 2003, TOCOM began working with Independent Software Vendors (ISVs) to bring its products and services to more market participants.
List of TOCOM-approved ISVs
- FIS
- ION Trading Japan
- Nihon Techno Systems Ltd.
- TRAdE WORKS COMPANY LTD.
- Multi Wave Co., LTD.
- Trading Technologies Japan
- RTS Realtime Systems
- Fractal Systems Inc.
- Success Consulting Co. Ltd
- AIRFRONT CO LTD
- SOLEKIA Limited
- Orc Japan KK
- CQG International Ltd
- Trade Systems Co. Ltd
- INTEC Inc.
- Three A System Corporation
- FFasttFill plc
- NTT Communications Corporation
- Future Assist Corporation
- Fidessa Group plc
- ULLINK Japan
- Bloomberg Trading Services Japan
- FlexTrade Systems Pte Ltd
- CyberQuote Japan Ltd
- INTERTRADE Co. Ltd
- Simplex Inc.
- Zhengzhou Esunny Information Technology Ltd Co.
- Stellar Trading Systems
- Atplatform Technology Limited
How to Start Trading
An alternative way to speculate on the prices of commodities traded on the Tokyo and JPX exchanges is through online brokerages offering derivatives like CFDs and options.
Traders in can open an account at one of these regulated brokers to begin trading, or read our in-depth reviews to learn more.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Further Reading
- See our guides to trading gold, silver and other metals.
- Learn more about the world’s largest commodity exchanges including Euronext, the European Energy Exchange (EEX), the Zhengzhou Commodity Exchange (ZCE), the Deutsche Borse Group.
- If you’d like a primer on how to trade commodities, see our introduction to commodity trading.
