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SINGAPORE (Dow Jones)–The Tokyo Commodity Exchange is holding consultations with its trading members on a variety of proposals aimed at streamlining trading hours and improving liquidity in its rubber futures contract, an exchange official said Monday.
There has been increased talk in the market lately that, Tocom, who”s rubber futures contract has traditionally been the benchmark for the trade, may increase the trading band for the contract to allow greater price discovery and do away with the night trading session to improve liquidity in the day session.
The exchange has received requests from commercial participants and their industry associations regarding the issue and discussions are “underway to increase the circuit breaker for rubber futures,” said Keiko Koyama, Tocom”s vice president for communications at its global business department.
Koyama, however, said she wasn”t aware of any decision yet to scrap the night session. “No such change has been discussed or determined at the exchange,” she said. “It is true that we have received requests from rubber market participants and their industry associations regarding our rubber trading hours. Based on such requests, we are interviewing our trading participants to understand their demand.”
Tocom”s night trading session runs from 0800 GMT to 1000 GMT, but the exchange has been struggling to generate sufficient trading interest to make a separate night session viable. Some market participants said the night session could be discontinued from 2012.
Moreover, Tocom may move up the circuit-breaker trigger to Y20, from Y10 which triggers the first circuit-breaker now, a trader in Hat Yai said. Koyama didn”t comment on what the new trigger would be.
Thai Rubber Association president Pongsak Kerdvongbundit said a meeting had taken place between the Asian Rubber Business Council and Tocom in May to discuss various issues including trading hours and circuit breakers. TRA is a member of the Asian Rubber Business Council.
Pongsak said one of the proposals put forth was a daily price limit instead of the circuit breaker system now. “I hear the entire system is under review now,” he said.
“I believe more traders will participate in Tocom if there is no night session,” said the trader in Hat Yai. “The volumes are too small in the night session. If I go in, it”s hard to get out. And if I keep the position overnight, the (market) may have changed the next morning.”
Tocom introduced the night session in 2009 to boost volumes and introduced circuit breakers to replace daily trading limits. In August 2010, it reduced the size of a single tradable lot with a view to attract smaller commercial players into the market. Despite these measures, however, trading volumes have remained largely unchanged.
Source: Reuters