MCX, Tocom sign pact

Tokyo Commodity Exchange (TOCOM) today signed a memorandum of understanding with the Mumbai-based Multi-Commodity Exchange (MCX), for mutual co-operation, information sharing, training in risk management and market development.

TOCOM is looking at launching Indian rubber contracts on the exchange with delivery centres in India provided both the Indian and Japanese governments permit international trading in commodities.

Similarly, MCX would also be looking at launching TOCOM energy products including gasoline, kerosene and fuel oil.

The managing director of MCX, Jignesh Shah said information sharing would lay the foundation for future developments.

MCX would benefit from partnering with a leading exchange like TOCOM, which has 20 years of experience.

The exchanges are also looking to form a joint co-ordination committee to develop a common Asian margining and clearing arrangement.

The Union minister of agriculture, consumer affairs, food and public distribution, Sharad Pawar, said at the signing ceremony, "India should become a trend setter in respect to the price or the demand and supply in at least five major commodities."

Internationally commodity exchanges allow trading in indices, energy products, weather futures, freight futures and interest rate derivatives among others, Pawar added.

Indian traders should pay equal attention to global commodities like gold, silver and crude besides agriculture. This, he said, would help the country emerge as a global trading hub between Tokyo and London.

The president of TOCOM, Hamada Takamichi, said the exchange's west Asian crude oil futures would be better suited to serve as a benchmark price in the Asian oil market rather than the WTI (West Texas Intermediate) price at NYMEX.

In addition, the demand supply situation in the US, which drives the NYMEX WTI, was different from the Asian situation.

TOCOM has strategic understandings with seven global exchanges like the Singapore Exchange (SGX), New York Mercantile Exchange (NYMEX), Korean Futures Exchange (KOFEX), China's Dalian Commodity Exchange (DCE), the London-based International Petroleum Exchange (IPE) and the Taiwan Futures Exchange (TAIFEX).