The , or TOCOM, is an energy exchange in

Tokyo Tokyo, officially the Tokyo Metropolis, is the capital of Japan, capital and List of cities in Japan, most populous city in Japan. With a population of over 14 million in the city proper in 2023, it is List of largest cities, one of the most ...

Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...

. TOCOM is operated by , a wholly owned subsidiary of Japan Exchange Group (JPX). Under the of Japan, It is a licensed commodity exchange operator that provides market facilities for trading of commodity derivatives, physical commodities and commodity price index futures. TOCOM once operated electronic markets for

precious metals Precious metals are rare, naturally occurring metallic chemical elements of high economic value. Precious metals, particularly the noble metals, are more corrosion resistant and less chemically reactive than most elements. They are usual ...

, oil,

rubber Rubber, also called India rubber, latex, Amazonian rubber, ''caucho'', or ''caoutchouc'', as initially produced, consists of polymers of the organic compound isoprene, with minor impurities of other organic compounds. Types of polyisoprene ...

and soft commodities. It offered futures and options contracts for precious metals (

gold Gold is a chemical element; it has chemical symbol Au (from Latin ) and atomic number 79. In its pure form, it is a brightness, bright, slightly orange-yellow, dense, soft, malleable, and ductile metal. Chemically, gold is a transition metal ...

silver Silver is a chemical element; it has Symbol (chemistry), symbol Ag () and atomic number 47. A soft, whitish-gray, lustrous transition metal, it exhibits the highest electrical conductivity, thermal conductivity, and reflectivity of any metal. ...

platinum Platinum is a chemical element; it has Symbol (chemistry), symbol Pt and atomic number 78. It is a density, dense, malleable, ductility, ductile, highly unreactive, precious metal, precious, silverish-white transition metal. Its name origina ...

and

palladium Palladium is a chemical element; it has symbol Pd and atomic number 46. It is a rare and lustrous silvery-white metal discovered in 1802 by the English chemist William Hyde Wollaston. He named it after the asteroid Pallas (formally 2 Pallas), ...

); energy (

crude oil Petroleum, also known as crude oil or simply oil, is a naturally occurring, yellowish-black liquid chemical mixture found in geological formations, consisting mainly of hydrocarbons. The term ''petroleum'' refers both to naturally occurring u ...

gasoline Gasoline ( North American English) or petrol ( Commonwealth English) is a petrochemical product characterized as a transparent, yellowish, and flammable liquid normally used as a fuel for spark-ignited internal combustion engines. When for ...

kerosene Kerosene, or paraffin, is a combustibility, combustible hydrocarbon liquid which is derived from petroleum. It is widely used as a fuel in Aviation fuel, aviation as well as households. Its name derives from the Greek (''kērós'') meaning " ...

and gas oil); natural rubber and agricultural products (

soybeans The soybean, soy bean, or soya bean (''Glycine max'') is a species of legume native to East Asia, widely grown for its edible bean. Soy is a staple crop, the world's most grown legume, and an important animal feed. Soy is a key source of f ...

corn Maize (; ''Zea mays''), also known as corn in North American English, is a tall stout Poaceae, grass that produces cereal grain. It was domesticated by indigenous peoples of Mexico, indigenous peoples in southern Mexico about 9,000 years ago ...

and azuki). JPX acquired TOCOM in 2019 and transferred these exchange-traded derivatives markets except energy derivatives markets to the Osaka Exchange in 2020, which became Japan's largest and one of Asia's most prominent derivatives exchanges. Today, TOCOM is the only Japanese exchange that offers energy commodities futures on gasoline, kerosene, gas oil, Dubai Crude oil,

liquefied natural gas Liquefied natural gas (LNG) is natural gas (predominantly methane, CH4, with some mixture of ethane, C2H6) that has been cooled to liquid form for ease and safety of non-pressurized storage or transport. It takes up about 1/600th the volume o ...

, baseload electricity, peakload electricity, Chukyo gasoline, and Chukyo kerosene.

Products

TOCOM's Energy Market and Chukyo Oil Market offer the following products:

History

TOCOM was established in 1984 with the merger of the Tokyo Textile Exchange, founded in 1951, the Tokyo Rubber Exchange, and the Tokyo Gold Exchange. The exchange became a for-profit shareholder-owned company in 2008. It launched the current trading platform based on the Nasdaq OMX technology in 2009. TOCOM will use Japan Exchange Group's new derivatives trading platform, Next J-Gate, from September 2016. In 2019 TOCOM was acquired by JPX. The retail electricity market in Japan was fully liberalized in April 2016, followed by a series of reforms in the electricity sector in Japan, such as the revision of the rules on power grids and the establishment of a baseload electricity market of the Japan Electric Power Exchange (JEPX). Against this background, the size of the JEPX wholesale electricity market expanded rapidly to reach approximately one-third of the total electricity demand in Japan. As most of the power companies that newly entered the retail power market rely on JEPX for procurement, the importance of JEPX increased and the need to hedge price

volatility risk Volatility risk is the risk of an adverse change of price, due to changes in the volatility of a factor affecting that price. It usually applies to derivative instruments, and their portfolios, where the volatility of the underlying asset is a ...

rose. In September 2019, to meet such demands, TOCOM listed four electricity futures contracts on a trial basis: East Area Baseload Electricity, West Area Baseload Electricity, East Area Peakload Electricity and West Area Peakload Electricity. In 2020, to centralize commodity trading and clearing operations, its non-energy futures markets were transferred to the Osaka Exchange and put under the management of Japan Securities Clearing Corporation (JSCC), which absorbed Japan Commodity Clearing House Co., Ltd. (JCCH), a subsidiary of TOCOM. This left TOCOM with only fuel and electricity futures trading. On 5 August 2020, TOCOM's head office relocated from the Tokyo Commodity Exchange Horidome Building in the district to the Tokyo Stock Exchange Building in Tokyo's financial district, Nihonbashi Kabutochō. On 4 April 2022, TOCOM listed LNG (Platts JKM) futures contracts on a trial basis and changed the listing status of the electricity futures from trial listing to permanent listing. This will improve the market convenience of TOCOM as a “Consolidated Energy Derivatives Exchange” where one can trade the electricity futures and the power generation fuel futures in one-stop trading environment. On 19 January 2023, JPX signed a memorandum of understanding (MOU) with JEPX so that TOCOM's electricity futures market and JEPX's electricity

spot market The spot market or cash market is a public financial market in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market, in which delivery is due at a later date. In a spot market, s ...

could work together and share information to increase the convenience and competitiveness of the Japanese power market. In 2022, fluctuations in electricity prices intensified due to several factors, such as rising fuel prices caused by the

Russian invasion of Ukraine On 24 February 2022, , starting the largest and deadliest war in Europe since World War II, in a major escalation of the Russo-Ukrainian War, conflict between the two countries which began in 2014. The fighting has caused hundreds of thou ...

and concerns about power supply shortages in the summer and winter. Under these circumstances, the role of these markets to ensure stable power supply and hedge price fluctuation risks became even more important.

References

External links

JPX Official Website
{{in lang, en

Commodity exchanges in Japan Futures exchanges Companies based in Tokyo Financial services companies established in 1951 1951 establishments in Japan Economy of Tokyo Japan Exchange Group Energy exchanges Electric power exchanges