CME to launch first yen Topix futures contract outside Japan

PUBLISHED : Thursday, 19 October, 2017, 10:05am
UPDATED : Thursday, 19 October, 2017, 11:07pm

CME Group, one of the world’s largest derivatives exchanges, has signed an agreement with Japan Exchange Group and will launch the first Japanese yen-denominated Topix futures contracts outside Japan by the first quarter of 2018, the group’s global head of equity products said on Thursday.

Currently, the yen-denominated Topix futures are only available on JPX, which operates several securities exchanges including Tokyo Stock Exchange and Osaka Securities Exchange.

“We see strong growth in Asia,” Tim McCourt, global head of equity products for Chicago-based CME (Chicago Mercantile Exchange) Group, said in an interview.

“We want to offer more locally relevant products in our product suite, so our platform can attract more local investors. Meantime, I believe [the launch] will bring more global investors to Asia as well.”

The move was also a response to investor requests, as international investors increasingly want to participate in the growth of the Japanese economy and hedge opportunities related to its equity markets, he added.

“We want to make our product offering more diverse for international investors.”

The contract will begin trading on CME Globex, an electronic trading platform, by the first quarter of 2018, pending the relevant regulatory review.

After the launch, CME Group will be the only derivatives marketplace outside Japan to offer futures contracts based on two main Japanese indices – the benchmark Nikkei 225 and the broader Tokyo Stock Price Index (Topix), according to the company.

The Nikkei 225 tracks Japan’s top 225 blue-chip companies traded on the Tokyo Stock Exchange (TSE) based on their prices.

Topix measures all domestic companies on the TSE’s First Section, which is for large-sized companies, based on market cap and the number of shares available for trading, also known as the free float.

CME Group currently offers Nikkei futures, including yen- and US dollar-denominated Nikkei 225 Index Futures, and E-mini Nikkei 225 yen-denominated Futures.

“We look forward to a fruitful relationship in growing our markets together with CME Group through a wide range of collaborative activities … and in particular, raising the awareness of Topix globally,” said Akira Kiyota, Group CEO for JPX, in a statement.

“With the launch of Topix futures on CME Globex and the promotion of connectivity services between our co-location facilities, we are confident that we will better serve the needs of international investors, helping them realise smoother and more efficient price formations on more active markets.”

The product will be listed with and subject to the rules and regulations of CME, the CME Group said in the statement.