The Tokyo Commodity Exchange, Inc, announced today that official launch date for implementing Standard Combination Orders (SCO) on Inter-Commodity Spreads in the Oil and Chukyo-Oil Markets is March 24, 2014. The Exchange has made its preliminary announcement on November 12, 2013.
Crack Spreads have been traded by placing separate orders and monitoring the price differences between crude oil and other oil products. It has been difficult to fix an expected spread without the simultaneous execution of multiple orders. The implementation of SCO on inter-commodity Spreads enables market participants trading crack spreads to simultaneously execute orders at the intended spread.
TOCOM expects offering SCO on Inter-Commodity Spread to improve convenience and to bring more liquidity to the markets.
Summary of SCO on Inter-Commodity Spread
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1. Inter-Commodity Combinations Available for Trade |
1. Oil Market Division
2. Chukyo-Oil Market Division1) Gasoline-Crude Oil, 2) Kerosene-Crude Oil, 3) Gas Oil-Crude Oil,
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2. Contract- Months Combination Series Available for Trade |
Combinations are only allowed between the same contract month numbers(e.g., first contract month vs. first contract month?second contract month vs. second contract month. There will be six series for each inter-commodity combination of 1. (1) and (2) above) (1) Oil Market Division(six inter-commodity combinations)× 6 series = 36 series |
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3. Buy/Sell Rules for SCO on inter- commodity spread |
•SELL A-B SCO = sell product-A and buy product-B Example 1: Gasoline December contract vs. Crude Oil November contract
Example 2: Gasoline December contract vs. Kerosene December contract
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4. Spread Prices |
Example 2: Gasoline December contract vs. Kerosene December contract
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5. First and Last Trading Days |
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