What Is the Tokyo Commodity Exchange (TOCOM)?

The term Tokyo Commodity Exchange (TOCOM) refers to a commodities futures exchange located in Tokyo. The exchange was founded in 1984 as a result of the merger between the Tokyo Textile Exchange, the Tokyo Rubber Exchange, and the Tokyo Gold Exchange.

It is the largest exchange of its kind in Japan. Its mission is to facilitate the trading of products that are based on the Commodity Derivatives Act, which regulates business around domestic commodities. Some of the primary commodities listed include precious metals and agricultural products. The TOCOM is a subsidiary of the Japan Exchange Group.

Key Takeaways

  • The Tokyo Commodity Exchange is Japan's largest commodities futures exchange.
  • The exchange was created in 1984 following the merger of the Tokyo Textile Exchange, the Tokyo Rubber Exchange, and the Tokyo Gold Exchange.
  • TOCOM lists futures and options contracts for rubber, gold, silver, crude oil, gasoline, gas oil, kerosene, platinum, and palladium.
  • TOCOM operates Monday to Friday and runs two trading sessions per day, with a break between each.

How the Tokyo Commodity Exchange (TOCOM) Works

The Tokyo Commodity Exchange (TOCOM) is a for-profit stock company. It was purchased by the Japan Exchange Group in October 2019 and operates as a wholly-owned subsidiary. The TOCOM is the largest marketplace in Japan and one of the largest markets in the world for the purchase and sale of raw materials or primary goods, such as natural resources. 

The exchange gives investors the opportunity to trade futures and options contracts for rubber, gold, silver, crude oil, gasoline, gas oil, kerosene, platinum, and palladium. Gold, crude oil, platinum, and rubber were the commodities with the highest trading volume in 2020. The exchange offers mainly physically delivered transactions. However, cash-settled future trades may occur in the oil and precious metals markets.

The TOCOM operates two trading sessions per day, with a break between the two sessions:

  • The day session operates between 8:45 a.m. and 3:15 p.m. Orders are accepted for the daytime session at 8:00 a.m.
  • The night session runs between 4:30 p.m. and 5:30 p.m. for the energy (excluding electricity) and aluminum markets, and 4:30 p.m. and 7:00 p.m. for the electricity market. The exchange accepts orders for the night session daily at 4:15 p.m.

The exchange is closed on Sunday, Saturday, national holidays, December 31st, and the first three days of the New Year.

The Tokyo Commodity Exchange employs 50 individuals and uses an electronic trading system.  TOCOM first allowed continuous trading on an electronic platform in April 1991. In January 2003, the exchange introduced an advanced second-generation electronic trading platform. New versions of the electronic system were introduced in 2009 and 2013.

The exchange offers several levels of membership depending on the type of business that the member conducts. Applicants must also be members of the Japan Commodity Clearing House (JCCH) in order to be considered for membership.

History of the Tokyo Commodity Exchange (TOCOM)

As noted above, 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. The TOCOM initially 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 were added to the exchange as additional listings.