TOCOM Decides to Reopen Gas Oil Futures Contract May 6
Tokyo Commodity Exchange, Inc. (“TOCOM” or the “Exchange”) announced on 23 March that the Exchange has been authorized by the Minister of Economy, Trade and Industry to reopen the gas oil futures market and therefore TOCOM has officially decided to set the reopening date on May 6, 2010.
TOCOM listed the gas oil futures contract in September 2003 in order to serve the hedging needs of commercials, but suspended the contract in February 2006, because of its low level of liquidity. Recently there has been a growing call from the oil industry to restart gas oil futures trading, which offers an important price formation function and the ability to hedge the risk of price fluctuation, in light of great changes in the environment surrounding this commodity in Japan, such as the expanded volatility of the crude oil price and the introduction of market price-linked formulas in oil refiners’ new wholesale pricing.
Tadashi Ezaki, President and CEO of TOCOM, made the following statement:
“I’m very pleased that we are finally able to offer a gas oil futures contract in response to the requests from the Japanese oil industry. Toward the reopening of the gas oil market, we have re-designed the contract so as to make a wider group of commercial players (such as distributors, users of gas oil, and oil refiners) able to participate in the delivery process, while working to ensure effective measures are in place to prevent the evasion of taxes imposed on gas oil. I’d like to express my gratitude to all the parties involved in this process for their kind cooperation. TOCOM will continue to work with its Members to provide markets that truly meet their needs.”