Published On: Fri, Nov 20th, 2009

TOCOM to Suspend Trading of Aluminum Futures

Tokyo Commodity Exchange, Inc. (TOCOM) announced November 17 that the Exchange is going to suspend trading of the Aluminum futures contract in October 2010. A new contract month will not be generated beyond the existing back contract month, which is the October 2010 contract. When it reaches the last trading day on October 26, 2010, all trading of the Aluminum futures contract will be suspended thereafter.

TOCOM’s Aluminum market started trading on April 7, 1997, reaching a record high open interest at 46,992 contracts in October of that year, showing its potential for growth as a public utility service for businesses to hedge their price fluctuation risks as well as an investment vehicle for asset management. However, a drastic decrease in trading participants followed, and market liquidity has remained stagnant.

Despite the Exchange’s efforts to stimulate the market by hosting promotional seminars and adjusting the delivery process and contract unit, liquidity did not recover as expected. Evaluating that the current situation prevents the formation of fair prices, TOCOM has decided to suspend Aluminum futures trading indefinitely.

TOCOM’s decision to suspend the trading, but not to delist the contract, reflects the fact that the Exchange anticipates to eventually re-launch the Aluminum futures contract, which is actively traded in London and Shanghai, when TOCOM will consider listing non-ferrous metals, such as copper, in future.

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