Tokyo Commodity Exchange
Tokyo Commodity Exchange (TOCOM) brokers provide access to the commodity futures market, specialising in energy including gasoline, kerosene and electricity. This guide details the basics of the Tokyo Commodity Exchange as well as how to trade available products. We also rank the best brokers.
Tokyo Commodity Exchange Brokers UK
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Comparing Brokers
The Tokyo Commodity Exchange is fairly limited in terms of foreign investment. However, some UK brokers offer tradable assets via its holding company, the Japan Exchange Group (JPX), including listed stocks and index futures. Alternatively, British investors can trade CFDs and options at the top commodity brokers.
Compare the following when selecting a brokerage:
Market Access
Consider which markets and trading vehicles are available via the Tokyo Commodity Exchange, or JPX subsidiaries. These include CFDs, commodities, stocks, spread betting or futures.
For example, CMC Markets offers spread bets and CFD trading on some of the biggest Japanese stocks, including Toyota, Sony and Mitsubishi with spreads from 0.5 pips.
Note that energy futures are available directly via the Tokyo Commodity Exchange or registered Japanese broker-dealers.
Fees
Make a comparison of any brokerage fees, including spreads on Japanese securities, trading commissions and currency conversion fees. For example, Interactive Brokers (IBKR) charges 0.08% commission on Japanese stocks with a JPY 80 minimum order value.
Some UK brokers also charge account inactivity fees on dormant accounts.
Regulatory Compliance
Check that the broker is regulated by the relevant jurisdictional authority, such as the UK’s Financial Conduct Authority (FCA). The FCA ensures customers are treated fairly and enforces rules to protect funds.
FCA-regulated brokers facilitating Japanese securities trading include AvaTrade.
Trading Platform
Make sure the broker’s platform offers the relevant assets with real-time data and fast execution speeds. Leading brokers offer third-party platforms such as MetaTrader 4 (MT4), as well as proprietary software or additional analytics tools.
For instance, IG Index offers a proprietary platform available via web browser and mobile app, plus specialist platforms ProRealTime, L2 Dealer and MT4.
It is also worth checking for any demo accounts, which allow you to test out the broker’s platform risk-free before committing to live trades.
Customer Support
Consider whether the broker has a presence in the UK and offers local customer support. Products listed on TOCOM and other subsidiaries of the JPX are available to trade Monday through Friday, though timings vary.
The best brokers will offer round-the-clock support during weekdays so you can get the help you need when trading any assets on the exchange.
Additional Tools
Look for features that suit your trading requirements and experience level. This may include market analysis and trading calendars, so you can keep track of Japanese and Asian market news and updates.
Some TOCOM brokers may also offer a range of educational resources and learning tools which you can access directly via the platform or app.
What Is The Tokyo Commodity Exchange?
The Tokyo Commodity Exchange (TOCOM), also known in Japan as the Tokyo Kogyoin Torihikijo, is a futures and options exchange offering the trading of energy commodities. These include gasoline, gas oil, kerosene, Dubai crude oil, Chukyo gasoline, Chukyo kerosene and electricity, which are traded as derivatives, physical commodities and index futures.
The TOCOM is a self-regulatory organisation, although the board consists mainly of directors and decision-makers who are independent of the internal operations of the exchange. The TOCOM is underpinned by the Commodity Derivatives Act.
Whilst TOCOM itself is fairly closed off to foreign investors, there is a wider variety of assets to trade via other subsidiaries within its parent company, the Japan Exchange Group (JPX). For example, UK traders can access a range of Japanese stocks via the Tokyo Stock Exchange, as well as some index futures via the Osaka Exchange.
Popular brokers that facilitate trading through these exchanges include Saxo Bank and Pepperstone.
History
The Tokyo Commodity Exchange was launched in 1984 following the mergers of the Tokyo Textile Exchange in 1951, the Tokyo Rubber Exchange in 1952, and the Tokyo Gold Exchange in 1982.
As such, the TOCOM initially supported a wider variety of commodity marketplaces than it does today. This included agricultural soft commodities, precious metals, energy and rubber.
In July 2020, TOCOM became a wholly owned subsidiary of the Japan Exchange Group (JPX), facilitating the transfer of precious metals and agricultural products to the Osaka Exchange (OSE).
Other notable dates include:
- 1951 – The Tokyo Textile Exchange (TTE) provides a platform for domestic cotton textile manufacturers to hedge against price volatility. This later expanded to other futures contracts in wool, silk and rayon.
- 1973 – The oil crisis leads to the introduction of crude oil futures contracts, later expanding to new contracts for precious metals, rubber and other commodities.
- 2003 – TTE merges with the Tokyo Grain Exchange to form the TOCOM. The mergers allowed TOCOM to increase its market share to compete amongst other global exchanges.
- 2008 – TOCOM launches its electronic trading platform, TOCOM-Next, which increased transparency and efficiency in the trading process. The platform allowed for the introduction of new contracts, such as gasoline and kerosene.
- 2019 – TOCOM introduces a ‘Green Gold’ futures contract (certified by the Responsible Jewellery Council) in its bid to promote more sustainable practices in commodity trading.
- 2020 – TOCOM becomes a wholly owned subsidiary of Japan Exchange Group (JPX), handing over its agricultural, rubber, and precious metals markets to the Osaka Exchange.
Energy Futures
The Tokyo Commodity Exchange currently offers 9 energy futures and 2 Chukyo oil futures, tradable for physical exchange on its J-GATE proprietary trading platform, which integrates with the parent systems of JPX.
- Dubai Crude Oil
- Gasoline
- Kerosene
- Gas Oil
- East Area Baseload Electricity
- West Area Baseload Electricity
- East Area Peakload Electricity
- West Area Peakload Electricity
- LNG (Platts JKM)
- Chukyo Gasoline
- Chukyo Kerosene
Other Markets
Other markets available among JPX’s other subsidiaries include Japanese indices, overseas indices, bonds, precious metals and soft commodity futures. Whilst some may be available on foreign trading platforms, the majority can be traded on JPX’s proprietary platform, J-GATE.
Popular products include:
- JPX-Nikkei Index 225 futures: This contract tracks the performance of 225 large-cap Japanese companies listed on the Tokyo Stock Exchange and is used as a benchmark in various financial instruments.
- Dubai crude oil futures: These are cash-settled contracts of Platts Dubai crude oil. Japan is almost fully dependent on imports from Middle Eastern countries. As such, Platts Dubai crude oil prices are commonly used as a benchmark for the price of Middle Eastern-imported crude oil within Asia.
- Gold futures: The JPX offers physically delivered gold contracts. The price of gold is considered one of the most important global economic indicators and is therefore an attractive investment opportunity for many market participants.
- Rubber futures: Asian countries such as Thailand and Malaysia account for around 80% of rubber production, with Japan importing all its natural rubber for domestic consumption. Physical rubber contracts are based on the prices of RSS3 and TSR20, two grades of natural rubber, which are commonly used in tires, medical equipment and infrastructure.
Investors can also trade in stocks listed on the Tokyo Stock Exchange (TSE), another subsidiary of JPX. As of March 2023, the top 10 listed companies by market capitalisation (in trillion Japanese yen) were:
- Toyota Motor Corporation: JPY 30.67 tn
- Keyence Corporation: JPY 15.67 tn
- Sony Corporation: JPY 15.11 tn
- Mitsubishi UFJ Financial: JPY 10.67 tn
- NTT (Nippon Telegraph and Telephone): JPY 9.73 tn
- KDDI: JPY 9.43 tn
- Daiichi Sankyo: JPY 9.39 tn
- Fast Retailing: JPY 9.19 tn
- SoftBank Group Corp: JPY 8.93 tn
- Shin-Etsu Chemical: JPY 8.65 tn
Trading Hours
The Tokyo Commodity Exchange is open Monday to Friday, with day and night sessions running each day. Specific hours for energy futures are as follows:
- Electricity: 8.45 am – 3.15 pm JST and 4.30 pm – 7.00 pm JST (GMT+9)
- Oil: 08.45 am – 3.15 pm JST and 4.30 pm – 6.00 am JST the following day (GMT+9)
You can find specific hours for all products available via the Japan Exchange Group and its subsidiaries on the JPX website.
Market Holidays
The Tokyo Commodity Exchange closes during the following national holidays:
- January 1: New Year’s Day
- February 11: National Foundation Day
- March 20: Vernal Equinox Day
- April 29: Showa Day
- May 4 and 5: Greenery Day and Children’s Day (these two national holidays are close together in Japan and are often combined to create a longer holiday period)
- July 23: Marine Day
- September 21: Respect-for-the-Aged Day
- November 3: Culture Day
- December 28 to 31: Closing for year-end and New Year’s holidays
There are also routine maintenance days in mid-January and mid-August when the exchange is closed.
Regulation
The Tokyo Commodity Exchange is a self-regulatory organisation (SRO) which oversees all exchange operations via a self-regulatory committee (SRC). The SRC mainly consists of independent directors to ensure the fair and impartial management of internal affairs.
The key functions of the TOCOM SRC include examinations of trades and trade practices, imposing sanctions against members, and managing exchange memberships.
Brokers offering Japanese derivatives in the UK are subject to the regulations of the Financial Conduct Authority (FCA). The FCA sets out rules and guidelines for UK brokers that help protect customers. This includes segregated funds, compensation up to £85,000 in case of insolvency and negative balance protection. Brokers must also adhere to conduct requirements and rules to ensure transparency in their business operations.
Interactive Brokers, IG Index, and Saxo Markets are all regulated by the FCA and offer access to a range of global markets, including those listed on the JPX.
Bottom Line On The Tokyo Commodity Exchange
Tokyo Commodity Exchange brokers facilitate the trading of energy and commodity futures such as electricity and Dubai crude oil. However, traders looking for more accessible ways to trade the Japanese markets can do so via TOCOM’s parent company, the Japan Exchange Group (JPX). This may include index futures as well as Japanese company stocks. Alternatively, traders can turn to online commodity brokers.
FAQ
Can I Trade Precious Metals On The Tokyo Commodity Exchange?
Until July 2020, investors could trade precious metals and other commodities on the Tokyo Commodity Exchange. However, since the acquisition of TOCOM by the Japan Exchange Group, the trading of precious metals has been handed over to another subsidiary, the Osaka Exchange.
Foreign investor access to these markets is generally limited, however, you can trade several JPX-listed stocks with some UK brokers.
What Can I Trade At Tokyo Commodity Exchange Brokers?
The Tokyo Commodity Exchange offers a range of energy derivatives, physical commodities and index commodity futures, including Chukyo oil and electricity. With that said, these products are difficult to access for foreign investors.
If you are looking to trade Japanese securities, many JPX-listed stocks are available at popular UK brokers.
What Are The UK Trading Hours On The Tokyo Commodity Exchange?
Electricity futures are open Monday to Friday, 11.45 pm – 6.15 am GMT (the following day) and then 7.30 am – 10.00 am GMT. Oil futures are open 11.45 pm – 6.15 am GMT (the following day) and then 7.30 am – 9.00 pm GMT. For other assets listed on the JPX, you can check the exchange’s website, although some brokers may also have their own trading sessions. In addition, check the trading holidays calendar on the JPX website.
Which Is The Best Tokyo Commodity Exchange Broker?
The best Tokyo Commodity Exchange broker is conditional on your personal trading requirements. See our guide to comparing a broker’s fees, platforms, market access and customer support. Also check for FCA-regulated brokers for a secure trading experience.
Is The Tokyo Commodity Exchange Regulated?
The Tokyo Commodity Exchange operates under its own self-regulatory commission (SRC) as per the Commodity Derivatives Act. The committee is an impartial set of outside directors who oversee all operations of the exchange. This includes the examination of trades and members of the organisation.
Article Sources
Top 10 Japanese companies by market cap, March 2023
Full list of derivatives (Japan Exchange Group)