Futures trading in rice started as early as 1730 in
Japan. In 1893 Japan enacted the Exchange Law giving birth to the Tokyo Rice
Exchange, which traded rice, cotton, sugar and raw silk futures. The present-day
Tokyo Grain Exchange (TGE) was formed in 1952 and merged with the Tokyo Sugar
Exchange in 1993. It had a membership in 2003 of 76 firms, known as Futures
Commission Merchants or FCMs. Trading in arabica and robusta futures started in
June 1998. As yet options are not traded.
TGE's website is www.tge.or.jp .
The exchange is open to foreign participation
through non-resident FCMs provided these are members of their own national
futures exchange or are registered with a government regulatory authority such
as the United States Commodity Futures Trading Commission. Non-resident FCMs
must operate through an exchange FCM with whom they have opened an account.
The contract
units clearly demonstrate that this is a futures market designed for an
importing country with many types of buyers, ranging from large to very small.
The contract unit for arabica is just 50 bags of 69 kg, or 3,450 kg. The
delivery unit though is 250 bags, or 17,250 kg. For robusta the contract unit is
5,000 kg and the delivery unit is 15,000 kg. The minimum price fluctuation is
equivalent to 500 yen per lot (arabica and robusta).