June 29, 2010

Japan's TOCOM open to take on rival's futures trading

The Tokyo Commodity Exchange (TOCOM) said it is only interested in taking on futures trading in corn, soy and coffee from an ailing rival exchange.

Local media have reported that TOCOM and the Tokyo Grain Exchange are looking to integrate as more signs emerge that the nation's struggling commodities exchanges are seeking to streamline their operations. TOCOM has denied the reports.

"We wouldn't make an approach ourselves because that would mean taking over a negative legacy, so we are waiting for things to unfold naturally," TOCOM Chief Executive Tadashi Ezaki.

All four Japanese commodities exchanges are losing money and TOCOM recently agreed to take over gasoline and kerosene trading currently handled by the Central Japan Commodity Exchange from October. They were products TOCOM already handled.

The Tokyo Grain Exchange handles trade in futures for corn, soy, red beans, coffee and raw sugar and it is set to integrate its trading platform with TOCOM's upgraded system from January 2011.

"I am not interested in every product listed but I find two to three products attractive, as they may help bolster trading on our exchange," Ezaki said.

TOCOM, which lists 11 products including oil, gold, rubber and other industrial commodity futures, accounts for over 90% of Japan's commodity trading.

Ezaki reiterated that boosting trading volume and returning to profit in the next two years is the exchange's top priority, not discussing potential mergers with others.