.jpg)
TOCOM will change its rules on the conditions for lifting Exceptional Measures for Price Limits (EMPLs) from May 1st, 2007.
1/ EMPL definition:
Under EMPLs, TOCOM expands the Price Limits imposed on each contracts, depending on the market situation. The conditions under which EMPLs are imposed are defined below:
“When the final contract prices for three or more contract months have reached the Price Limit in the same direction, the price limit will be expanded by 50% from the following business day.”
2/ Lifting of EMPLs:
Under the current rule, the EMPLs are lifted when three or more contract months did not reach the ordinary price limit.
In addition to this current lifting rule, the following rule will be added:
When the final contract prices for three or more contract months have reached the expanded Price Limit in the same direction for two consecutive business days, the EMPLs will only be lifted when the last contract price for all contract months, except the first contract month, didn’t reach the ordinary Price Limits for three consecutive business days.
Reasons for this change:
Recently, because of an increased volatility in our market, we have been experiencing the case where EMPLs are imposed for two consecutive days, then lifted in accordance with the current EMPL rules, only for the market to hit the ordinary Price Limit again. Due to this phenomenon, the TOCOM market could not fully perform its price formation function, and could not maintain its high level of price correlation with international markets. In order to address this issue, TOCOM has decided to make the above addition to the EMPL lifting rule.
