What is the Tokyo Commodity Exchange?
The Tokyo Commodity Exchange (TOCOM) is Japan’s largest commodity futures exchange.
TOCOM trades more than 24 million contracts annually, which represents 98.5% of Japan’s commodity futures. About half of all trading on TOCOM originates outside of Japan. Therefore, the exchange serves not only commodities traders in Japan, but also the rest of Asia and the global trading community at large.
It operates in the following lines of business:
|Exchange-Traded Markets||TOCOM operates an electronic platform for trading four categories of commodities:|
|Clearing and Settlement||Japan Commodity Clearing House Co., Ltd. (JCCH) is a central clearing house for commodity trades.|
JCCH is a wholly-owned subsidiary of TOCOM.
|Over-The-Counter (OTC) Markets||TOCOM’s wholly-owned subsidiary Japan OTC Exchange (JOE) operates an OTC trading platform for commodities and a brokering function centered on petroleum and liquefied natural gas (LNG) markets.|
|Data Services||TOCOM provides fee-based market data to both members and non-members including current and historical data.|
History of the Tokyo Commodity Exchange
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
|Electronic Trading||1991||Started continuous trading on electronic platform|
|Aluminum||1997||Discontinued aluminum trading in 2010|
|Oil Refined Products||1999||Listed gasoline and kerosene|
|Electronic Trading (Upgrade)||2003||Launched second generation platform|
|Gas Oil||Discontinued listing in 2006|
|Auction Floor Abolished|
|Japan Commodity Clearing House Co., Ltd. (JCHH)||2005||Commenced multi-exchange clearing house operations|
|Rubber, Precious Metals and Aluminum EFP||Introduced exchange future for physical (EFP) product, which is a transaction between two parties in which a futures contract on a commodity is exchanged for the actual physical good.|
|Gold Mini||2007||Introduced smaller-sized gold futures contract|
|Electronic Trading (Upgrade)||2009||Launched third generation platform|
|Extended Trading Hours||Extended trading until 11pm (7pm for rubber)|
|Nikkei-TOCOM Commodity Index Market||2010||Launched Nikkei-TOCOM Commodity Index futures (discontinued listing in 2012)|
|Emissions Trading||Established Emissions Trading Exchange Preparatory Corporation Inc. in collaboration with Tokyo Stock Exchange Group, Inc.|
|Gas Oil||Reopened market|
|Extended Trading Hours||Extended trading until 4am (rubber excluded)|
|JCHH||Became a subsidiary of TOCOM|
|Margin Change||2011||Introduced SPAN margin model at JCHH|
|Agricultural Products||2013||Launched soybean, Azuki (red bean), corn and raw sugar (raw sugar listing discontinued in January, 2015)|
|Japan OTC Exchange Inc. (JOE)||Established a joint venture with Ginga Energy Japan, Inc., to provide an OTC trading platform|
|Overseas Trading||2015||Granted registration as Foreign Board of Trade (FBOT) by the Commodity Futures Trading Commission (CFTC)|
|Gold||Launched rolling spot futures|
|Gold||2016||Launched physical gold transaction|
|Electronic Trading (Upgrade)||Launched fourth generation platform|
|Oil||2017||Launched physical oil transaction|
|Platinum||Launched rolling spot futures|
|OTC||JOE became wholly-owned subsidiary of TOCOM|
|Oil||Launched cash-settled oil products futures|
Who Are the Tokyo Commodity Exchange Executives?
The Board of Directors of TOCOM consists of eight directors, including the President and CEO of the exchange.
Key Members of TOCOM Management Team
|Takamichi Hamada||President & CEO||Hamada has been CEO of TOCOM since 2015. He also serves as an Auditor at Strategic Investment Partners, Inc. and a director at Fuji Electric Co., Ltd.|
His previous roles at Fuji Electric Co., Ltd include:
Other previous roles held by Hamada include:
& Senior Executive Adviser
|Nangaku has been Senior Executive Adviser at TOCOM since June 2009.|
He served as CEO and President of TOCOM until June 2009.
His previous roles include:
|Umetaro Nagao||Chief Operating Officer||Nagao also serves as Senior Executive Managing Officer and Director at TOCOM.|
How is the Tokyo Commodity Exchange Regulated?
TOCOM oversees the regulation of the exchange and clearing house it operates, and in that role, functions as a self-regulatory organization (SRO). The Commodity Derivatives Act in Japan sets forth the process for self-regulation and the establishment of a Self-Regulatory Committee.
A Self-Regulatory Committee (SRC) must be composed primarily of outside directors to ensure that is independent from trading, clearing and other operations of the exchange.
The TOCOM SRC has the power to make decisions on matters concerning self-regulation. TOCOM also has established a department in charge of self-regulation to support the Self-Regulatory Committee.
TOCOM self-regulatory functions cover the following three areas:
|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 the compliance and self-regulatory sections of the TOCOM website 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
What Products Does the TOCOM Trade?
The TOCOM website provides the following guide to its listed products:
Explanation of the TOCOM Listed Products Guide
Each TOCOM listed product falls into one of four broad categories: precious metals, oil, rubber or agricultural.
This column provides a description of the specific commodity.
The market data column provides links to the section of the TOCOM website that provides more details about the product:
- Quotes for Individual Products: This page shows the following information for each trading session:
- Contract month
- Last settlement price
Traders can also find links to pages with margin requirements, circuit breaker triggers, business calendars and historical data.
- Open Interest: This page shows the long and short open interests for commercials and non-commercials and other categories such as funds, retail traders and proprietary trading firms. Traders can also locate near and back month settlement prices.
- Stocks and Warehouse Receipts: Traders can track warehouse receipts for those commodities stored in warehouses. This allows traders to gauge changes in supply of the commodity.
Traders can find all of the contract specifications for each TOCOM commodity.
How Does TOCOM Conduct Trading?
TOCOM conducts all trading electronically on its fourth generation trading platform. Features of the platform include the following:
- NASDAQ Technology: The platform runs on NASDAQ’s Genium INET technology and its Pre-Trade Risk and SMARTS Market Surveillance technology
- Integration with J-GATE: TOCOM integrates its trading platform with the Osaka Exchange’s derivatives trading system (J-GATE), which also runs on the same NASDAQ trading technology
- Mutually-shared Trading System: The integration between TOCOM and the Osaka Securities Exchange (OSE) allows customers to seamlessly trade both financial products and commodities on the same platform. (* The integration of trading between two separate exchanges is one of first of its kind in the world. NASDAQ and TOCOM have been technology partners since 2009)
What Type of Memberships Does TOCOM Offer?
TOCOM offers six different classes of memberships:
Tokyo Commodity Exchange Membership Options
|Membership Category||Trade Permissions||Access to TOCOM|
|Trade Member||Proprietary transactions||Direct|
|Remote Broker Member||Direct|
|Remote Trade Member||Proprietary transactions (only based on consignment of commodity clearing transactions)||Direct|
|Affiliate Member||Members who have qualifications other than the above||Indirect|
|Associate Member||Foreign customers who trade often in TOCOM markets||Indirect|
(* TOCOM does not require a member to have a business location in Japan. However, Remote Brokers and Remote Trade Members must designate their clearing brokers as Agents for Service of Process. Indirect trading must take place through Commodity Derivatives Business Operators.)
TCOM has received regulatory approval to provide direct market access to market participants in the United States, Singapore, Hong Kong and Dubai.
Eligible Applicants for TOCOM Membership Class
|Membership Category||Eligible Applicants|
|Broker Member||Japanese entities licensed as Commodity Derivatives Business Operators by the Ministry of Economy, Trade and Industry (METI) or the Ministry of Agriculture, Forestry and Fisheries (MAFF)|
|Remote Broker Member||Foreign entities licensed as equivalent to Commodity Derivatives Business Operators in the country where the office is located.|
|Remote Trade Member|
Traders should consult the TOCOM membership brochure for further details including the fees and dues associated with each type of membership.
What Are the Margin Requirements?
The Japan Commodities Clearing House (JCCH), a wholly-owned subsidiary of TCOM, establishes rules concerning margin requirements for TOCOM customers.
The JCCH requires clearing margin from participants to protect against the possibility of a Clearing Member defaulting on an obligation. The amount of collateral required depends on many factors.
Beginning in 2011, 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 Clearing Margin Rules manual.
What Are the Fees and Charges?
The TOCOM website lists the following yen-denominated fees levied on Broker Members. This fee schedule does not include trading system-related costs and excludes consumption tax or guaranteed fund required:
|Market Divisions||Precious Metals||Oil||Rubber||Agricultural Product & Sugar||Chunkyo Oil|
|Registration Fee||Per Market Division: JPY 10 million (cap: JPY 25 million (exclude the registration fee for Agricultural Product and Sugar Market)|
|Monthly Membership Dues||JPY 60,000 per Market Division||JPY 40,000|
|Fee to Amend Registered Name||JPY 1 million|
(per contract; one-way)
|All products: JPY 20|
(per contract; for each side)
|All products: JPY 144|
(per contract; one-way)
*charged only to a member who take-up positions
|All products: JPY 2|
|Position Transfer Fees|
*charged only to a member who takes positions
|The amount calculated by multiplying the number of long/short position by JPY 5.|
|Fees for application |
and Trade Cancellation
|Trade cancellation fees per executed trade shall be calculated as follows: |
The amount calculated as SCB trigger level times the contract unit multiplier or 100,000 yen, whichever the higher.
The TOCOM website lists the following dues requirements for Trade Members, Remote Trade Members and Remote Broker Members:
|Market Divisions||Precious Metals||Oil||Rubber||Agricultural Product & Sugar||Chunkyo Oil|
|Monthly Membership Dues|
What Market Data is Available?
TOCOM provides a variety of market data and news feed options for its customers including the following:
- Quotes for Individual Products: Please refer to Explanation of the TOCOM Listed Products Guide in Products section above.
- Quotes for All Products by Trade Date: Previous five days of historical price data for each TOCOM listed product.
- Quotes for All Product 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 contract
- Spot Oil Market: Gasoline spot prices
- 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
- Nikkei TOCOM Commodity Index: Shows calculated historical values for index
- 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 of the TOCOM website for a complete menu of formats.
Traders can also find the fees for data and instructions for ordering here.
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. The following is a list of TOCOM-approved ISVs:
- 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 Can You Get Started Trading?
Many regulated brokerage firms offer contracts for difference (CFDs) based on products traded on TOCOM such as precious metals, oil, rubber and agricultural commodities.
CFDs are a derivative instrument that offers retail traders a different way to invest in financial markets. CFDs allow traders to use leverage to bet on the price of financial assets. The value of a CFD is the difference between the price of a financial instrument at the time of its purchase and its current price.
Many regulated brokers worldwide offer CFDs on shares, commodities, indices, forex and other financial assets. Customers deposit funds with the broker, which serve as margin. The advantage of CFDs is that traders can have exposure to financial assets without having to purchase shares, ETFs, futures or options.
Traders can open an account at one of these regulated brokerage firms and begin trading CFDs based on TOCOM products.