Tocom and Sicom to cross-list futures, explore cross-memberships

Tocom and Sicom to cross-list futures, explore cross-memberships

The deal was sealed with the signatures of Tadashi Ezaki, president and chief executive of Tocom, and Jeremy Ang, CEO of Sicom, at a meeting in Tokyo.

A Sicom spokesperson said talks were continuing, though at present Sicom is hoping to offer its rubber futures to Tocom market participants, while the Japanese exchange will list its own Rubber Futures and its newly listed Nikkei-Tocom Commodity Index Futures.

The two bourses will also explore the possibility of cross-membership so that members of one exchange can access the other remotely, though this would be subject to regulatory approvals.

Ang said he expected the deal to become “an important milestone in strengthening the benchmark status of Sicom’s rubber contracts”.

Ezaki said the agreement was a natural extension of the Japanese exchange’s “good relationship” with Sicom, and that he hoped it would boost Tocom’s Rubber contract.

“Through this collaboration, we would like to strengthen our relationships with the Singapore market and solidify our role of providing a venue for fair price formation and risk management tools to global commodities markets,” Ezaki said. “Our RSS3 rubber is widely respected as the benchmark for natural rubber prices, and many participants actively trade this market from southeast Asia. There are numerous possibilities that we could explore with Sicom, and we would like to work together closely to increase market liquidity on both exchanges.”

An executive at a futures commission merchant in Tokyo described the deal as an “interesting idea”, which could prove beneficial to both sides.

In May 2009, Sicom signed an agreement with the National Commodity and Derivatives Exchange of India to develop a cross-listing relationship. Sources close to Sicom have said the exchange hopes to move forward with cooperation under this deal in the fourth quarter of 2010, though the details are still being finalised.

Sicom has two rubber futures, both of 5 tonnes and physically settled: the Technically Specified Rubber 20 (FOB) Future, of which 13,000 contracts were traded in April and 64,000 so far this year; and the Ribbed Smoked Sheet 3 Future, with 3,770 bargains in April and 15,000 this year.

Tocom’s Rubber Future is the same size and also physically settled, but has much higher volume – 309,000 contracts were made in April, bringing the year to date volume to 1.1m. This means Tocom’s rubber volume is about 14 times bigger than Sicom’s.

Colin Packham, Sydney cpackham@fow.com

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