The Tokyo Commodity Exchange announced today the submission on March 27th of its application for electricity futures with the Ministry of Economy, Trade and Industry and the Ministry of Agriculture, Forestry and Fisheries.
In the past, electricity pricing regulations had minimized volatility risks for electric utilities in Japan. Now, the retail electricity market has been fully liberalized and price risks may rise. Electricity hedging in Japan takes place either on and OTC basis, or with forwards at the Japan Electric Power Exchange. It is important to expand hedging opportunities with the establishment of an electricity futures market. The Exchange has been planning for this market over many years.
The Exchange will launch electricity futures in the form of trial listing after regulatory approval and intends to contribute to the further development of Japan’s economy with transparent benchmark prices and opportunities for hedging.
Contract Specifications (tentative, subject to change)
| West Area Base load |
East Area Base Load |
West Area Peak |
East Area Peak |
|
| Type of Trading | Cash Settled Futures | |||
| Underlying | Average Price of JEPX* Spot Market (Day-Ahead) for the Kansai Area Base Load Price (0:00~24:00) |
Average Price of JEPX* Spot Market (Day-Ahead) for the Tokyo Area Base Load Price (0:00~24:00) |
Average Price of JEPX* Spot Market (Day-Ahead) for the Kansai Area Peak Load Price (8:00~20:00) |
Average Price of JEPX* Spot Market (Day-Ahead) for the Tokyo Area Peak Load Price (8:00~20:00) |
| Contract Unit Contract base size:0.1MWh |
“Monthly Contract”
Calendar days in Example: |
“Monthly Contract” Calendar days in month×24hrs×0.1MWh Example: |
“Monthly Contract” Business days in Example: |
“Monthly Contract” Business days in Example: |
| Minimum Tick Size |
JPY 0.01 (per KWh) | |||
| Final Settlement Price | JEPX Spot Market (Day-Ahead) Kansai Area Base Load monthly average price |
JEPX Spot Market (Day-Ahead) Tokyo Area Base Load monthly average price | JEPX Spot Market (Day-Ahead) Kansai Area Peak Load monthly average price | JEPX Spot Market (Day-Ahead) Tokyo Area Peak Load monthly average price |
| Contract Listed | Nearest 15 Months | |||
| Last Trading Day | The business day prior to the last day of the month | The business day prior to the last day of the month | The business day prior to the last weekday of each month | The business day prior to the last weekday of each month |
| First Listed Day | Business day following the last trading day | |||
| Final Settlement Day | First business day of the following month | |||
| Trading Hours | Day Session Trading: 8:45～15:15 Evening Session Trading: 16:30～19：00
*Single price auction is to be executed 4 times a day – opening and closing of day session and evening session. Trading method will be continuous trading during these sessions. |
|||
*JEPX: Japan Electric Power Exchange. JEPX is Japan’s only exchange facilitating wholesale electricity trades.
