| Tadayoshi Nakazawa, Chairman, The Tokyo Commodity Exchange |
Despite decelerated personal consumption, last year Japan's domestic economy experienced growth in exports and steady recovery of capital investment expenditure, thus raising the real GDP growth rate. However, the GDP deflator's extent of decline continued to increase, perpetuating severe conditions on the road to eliminating deflation.
Globally, uncertainty and instability prevailed for reasons that included SARS, the US and British deployment of troops in Iraq, the subsequent collapse of the Hussein regime, and the terrorism that has followed, which has continued to claim numerous victims.
In the commodity futures market, last year's annual trading volume achieved a record-high for the fifth consecutive year, reflecting the increase in various domestic and external risks. The realization of long-awaited and desired outcomes, such as substantial reduction of customer's personal income tax with respect to commodity futures trading and the June-instituted revision of clearing finality reduced from trading plus two days (T+2) to trading plus one day (T+1) constituted a major step forward.
The Tokyo Commodity Exchange's annual trading volume, accordingly, exceeded 80 million contracts for the first time, setting a new record for the sixth consecutive year. The introduction of a new system facilitated a record-setting trade volume of 1 million contracts in one day. TOCOM introduced a new in-house clearing system that was the first of its kind for a commodity exchange in Japan and also made arrangements with a liability insurance policy as surplus default protection. Gas oil was listed in September, and TOCOM concluded an MOU (Memorandum of Understanding) with IPE, following its MOU conclusion with NYMEX. With our provision of an ISV environment and internationalization-geared infrastructure, it gives me great pride that TOCOM has fulfilled its mission of becoming a leading market on the world's highest level. For this achievement, as well, I am indescribably grateful to our trading participants, and furthermore to our members, affiliated organizations and the Ministry of Economy, Trade and Industry for their encouragement and guidance.
With the US economic recovery trend and high Asian economic growth in place, I predict that economic activities will expand this year. However, crude oil price trends, exchange rates, the direction of financial policies and many other factors remain uncertain. Thus, the market environment will continue to harbor nontransparent economic, logistics and price-fluctuation risks. In such an environment, I believe that the importance of the function of commodity futures will be increasingly appreciated. With complete liberalization of brokerage commissions in sight, it is expected that further provisions will be made to boost market reliability and convenience, beginning with the customer fund protection system, which resulted from drastic revision of the Commodity Exchange Law for the first time in five years.
Under such changes in the environment, TOCOM will introduce options trading on gold futures in May, to start, and will also be investigating gasoline and crude oil option trading. Moreover, TOCOM plans to launch a specific feasibility study on listing of LPG, a closely interrelated commodity with other oil products already listed with the Exchange. In addition, we plan to improve the market's convenience by introducing EFP trading and similar measures. Our in-house Research Institute of Market Structure will continue researching the listing of emissions trading, electric power, weather derivatives and the like.
Lastly, with November commemorating our twentieth anniversary, this year deserves special note. Continuing with our mainstays of market reliability and convenience, I would like TOCOM to strive to operate from a progressive, reforming stance and to fortify our infrastructure, market controls and other risk management systems.
Together with my deepest wishes for everyone's continued growth and success, I wish to express my gratitude to you in advance for your further support and patronage this year.
