Tadashi Ezaki, President & CEO
Abenomics brought with it signs of a domestic economic recovery last year, as evidenced by higher stock prices and a weaker yen. In contrast, numerous global issues such as the events in Ukraine, growing tensions in the Middle East and concerns for slower European and Chinese economic growth were made for a volatile economy. At TOCOM, a lack of volatility in commodity prices and foreign exchange reduced volumes through August. From September, volumes improved as prices of globally traded commodities fluctuated on expectations of a turnaround in the U.S. economy, a drop in crude oil prices and a weakening yen.
We reached a number of milestones last year, starting with the celebration of the 30th anniversary of the merger of the three exchanges that formed TOCOM. In September of last year we signed a letter of intent with OSE, a subsidiary of JPX, to use their new derivatives trading system. This arrangement supports our intention to facilitate the entry of financial market investors to the commodity market as well as to reduce IT overhead. Also, we expect cooperation between the two exchanges to extend to areas outside of IT to contribute to the further development of Japan’s derivatives market. Meanwhile, last July I called for the convening of an advisory panel to work on turning around TOCOM’s business, which resulted in various new initiatives. Additionally, various measures, such as updated trading hours and the introduction of posted settlement transactions, were implemented to bolster our market. TOCOM’s subsidiary, Japan OTC Exchange, took its first steps towards establishing a comprehensive energy market by introducing TOCOM Swap and RIM Swap products in June and an LNG product in September.
In the New Year, we are poised to achieve a strong recovery in volume with further measures to promote the market. We will move forward with our business plan and the recommendations of the advisory panel in an expeditious manner. To be precise, we will address the following three issues:
Firstly, we will pursue the creation of an electricity futures market in anticipation of the liberalization of the retail electricity market in April 2016. Together with the launch of our LNG product last year, we intend to contribute to Japan’s energy policy.
Secondly, we are committed to giving our market participants the best possible experience. To this end, we are working on a new trading system and are lobbying for taxation changes.
Thirdly, we will continue to promote our market to a diverse set of market participants, including retail investors, commercials and international participants. We will continue to improve the range of listed commodities to meet investor needs and carry on with educational activities to achieve this goal.
Finally, on behalf of everyone at TOCOM, I’d like to wish you a peaceful and prosperous New Year. We hope 2015 will bring significant growth in Japan’s commodity market. Your continued support is highly appreciated.
Sincerely yours,
Tadashi Ezaki
President & CEO
Tokyo Commodity Exchange, Inc.