What is the Tokyo Commodity Exchange (TOCOM)
The Tokyo Commodity Exchange (TOCOM) has a designed mission of operating and overseeing commodity markets necessary for dealing in futures of certain commodities. Specifically, this means the products which list on the exchanges based on the Commodity Derivatives Act. The Act regulates business around domestic commodities. Some of the primary commodities listed include precious metals and agricultural products.
BREAKING DOWN Tokyo Commodity Exchange (TOCOM)
The formation of the Tokyo Commodity Exchange (TOCOM) came with the merger of the Tokyo Textile Exchange, the Tokyo Rubber Exchange, and the Tokyo Gold Exchange in November 1984. Initially, TOCOM focused on listing rubber, gold, silver, and platinum. Over the next two decades, the scope of the TOCOM broadened numerous times. In the 1990s, palladium, aluminum, gasoline, and kerosene would be among the additional listings.
TOCOM gives investors the opportunity to trade futures and options contracts for rubber, gold, silver, crude oil, gasoline, gas oil, kerosene, platinum, and palladium. However, gold sees the highest trading volume of all the commodities traded on the exchange, followed by platinum, gasoline, crude oil, and rubber. The exchange offers mainly physically delivered transactions. However, cash-settled future trades may occur in the oil and precious metals markets.
Tokyo Commodity Exchange (TOCOM) is a for-profit stock company. It is the largest marketplace in Japan, and one of the largest markets in the world, for the buying and selling of raw materials or primary goods, such as natural resources.
The Innovative Nature of TOCOM
The Tokyo Commodity Exchange uses an electronic trading system. TOCOM first allowed continuous trading on an electronic platform in April 1991. In January 2003, the exchange introduced a more advanced second-generation electronic trading platform. New versions of the electronic system would follow in 2009 and 2013. The marketplace takes pride in boasting innovative tools and aims to continually monitor available technology to ensure it is using the most innovative and sophisticated platform possible.
The exchange offers several levels of membership depending on the type of business which the member will conduct. For membership consideration, the applicant also must be a member of the Japan Commodity Clearing House (JCCH).
TOCOM rules state they operate two trading sessions per day, with a break between the two sessions. The exchange closes on Sunday, Saturday, national holidays, and December 31st and the first three days of the New Year.