Industry Body to Request 2 Tokyo Commodity Exchanges to Merge

Tokyo, Sept. 11 (Jiji Press)--The Japan Commodity Futures Industry Association will request that two commodity exchanges in Tokyo merge, informed sources told Jiji Press Thursday.

The two are the Tokyo Commodity Exchange, the largest Japanese
commodity futures and options exchange listing oil, gold and other
industrial products, and the Tokyo Grain Exchange, the futures market for
farm products such as corn and coffee.
The call, which will probably be made in October, is intended to
help the two struggling exchanges cut management costs, the sources said.
The association also plans to ask other exchanges to consider
merging and industry regulatory bodies to integrate, they said.
According to the association, commodity trading firms in fiscal
2007 earned commission revenue of about 120 billion yen, of which 12 billion
yen was paid to commodity exchanges and industry bodies as membership fees.
Given that total commission revenue in the first quarter of fiscal
2008 stood at about 20 billion yen, commodity traders are expected to face
difficulties in paying membership fees.
TOCOM, which will become a stock company on Dec. 1, is administered
by the Ministry of Economy, Trade and Industry, while the TGE is supervised
by the Ministry of Agriculture, Forestry and Fisheries. The two ministries
are said to be unenthusiastic about the merger.
The TGE, however, intends to integrate its trading system with that
of TOCOM by March 2011.
Many traders believe that there is no reason for the two exchanges
to remain as separate entities.
Volume on the commodity futures exchanges in Japan peaked at 155.79
million lots in fiscal 2003, but more than halved to 71.07 million lots in
fiscal 2007.
The number of commodity trading companies came to 70 at the end
March this year, down from 97 four years earlier.