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Let me begin by wishing you all a very happy New Year!
Last year, there was a lot of interest in the commodity markets, not only as an asset class to diversify one’s portfolio, but also because gold prices reached, in dollars, an all-time record high and a 26-year high in yen. 2009 was also the year during which the importance of commodity exchanges as an essential public utility was reaffirmed, with higher expectations/reliability put on exchange-traded products and the certainty of their settlement.
Foreign commodity exchanges are thriving as they take advantage of this momentum, whereas TOCOM was only finally able to stop the declining trend in volume since its peak in 2003. However, I am convinced that this year will be the year when an actual v-shape recovery will occur.
That is because many of our listed commodities rank among the top tier in terms of volume in Asia and their prices are widely recognized as benchmarks. The strong needs of the Japanese industry for hedging risk and for the formation of fair and transparent prices, as well as the fact that Japan has a sophisticated financial infrastructure and large monetary assets, should also contribute to this recovery.
Making the most of such potential to retrieve market liquidity, apart from launching a world-class trading system and introducing trading rules in line with global standards, TOCOM has also moved forward with its partnerships with financial markets, notably through the agreement with the Tokyo Stock Exchange Group, Inc. to establish an emissions trading exchange. These reforms have started to translate into signs of recovery. This year we intend to implement the following measures to continue on this path.
Market Design: Firstly, to further improve market design, we will make the market maker program introduced last year fully operational, we will introduce block trading and speed up efforts to start offering direct market access. With these measures, we aim to facilitate entry of a wider variety of market participants into the TOCOM markets and to improve the convenience of our markets.
Listed Commodities: Secondly, we will expand the lineup of listed commodities to make the TOCOM markets more attractive. On March 23, we are scheduled to list the Nikkei-TOCOM Commodity Index, while we plan to re-open the gas oil market in May in response to the strong demand from both oil companies and oil users.
Market Participants: Thirdly, we will intensify marketing activities to promote the entry of a wider variety of market participants, such as oil commercials, proprietary trading firms, institutional investors as well as individual investors. We will also make all the necessary efforts to have TOCOM price-linked ETFs and investment funds set up in order to invite indirect investment in the commodity markets from the financial and securities sector.
With the implementation of the above measures, we are committed to secure both reliable/convenient markets and a profitable organization, to establish ourselves as a prominent commodity exchange in Asia.
Lastly, I would like to wish all of you continued success, prosperity and happiness. I highly appreciate your continued support and collaboration.
Tadashi Ezaki
President & CEO
Tokyo Commodity Exchange, Inc.
