FIA Japan Annual General Meeting and Reception

FIA Japan will celebrate its 22nd anniversary and hold the Annual General Meeting and reception at International House, Roppongi, Tokyo on Thursday, April 15, 2010.

Reception will be held from 6: 15 to 8: 15 p.m. If you are interested in participating in the reception, please contact Ms. Ogawa (fiaj@brookandbridge.com), Executive Secretary to FIA Japan, to register by March 30.

GOLD SPONSORS

• Equinix
• Tokyo Commodity Exchange
• Tokyo Financial Exchange
• Orc Software

FIA Japan 21st Annual General Meeting and Reception

Reception will be held from 6: 30 to 8: 30 p.m. If you are interested in participating the reception, please contact Ms. Ogawa, Executive Secretary to FIA Japan (fiaj@brookandbridge.com) to register by April 2.

SPONSORS

• Equinix
• NYSE Liffe
• Tokyo Commodity Exchange
• Tokyo Financial Exchange

FIA Japan Delivers "Action Plan" for Improving Commodity Futures Clearing

Over the past several years, FIA-Japan has aggressively pushed the commodities industry to develop an adequate clearinghouse function in Japan. Last year we issued three reports that proposed a number of improvements and functional requirements for the clearinghouse. In January 2009, the Ministry of Economy, Trade and Industry asked FIA-Japan to draft an "Action Plan" for dealing with this important issue. On Feb. 9, 2009, we responded with a report titled "Report on Commodity Clearinghouse: Urgent Action" that was delivered to METI and also to the Ministry of Agriculture, Forestry and Fisheries and the Japan Commodity Clearing House.

Some of the key focal points in the report are as follows:

• In the commodity industry, the Tokyo Commodity Exchange is the only institution with an adequate capital base and structure to support the development of a clearing function meeting global requirements. Therefore, the clearinghouse should be established within and by Tocom.
• A working party should be created to take action and to direct the development of the clearinghouse.
• Outside experts and/or a global clearinghouse should be invited to provide consultation to the working party.
• The Japan financial/securities exchanges should be invited to work with and support this effort. The existing "silos" between commodities and financial markets should be crossed over and eventually dissolved. "Common clearing" among exchanges should be explored.

"It is FIA-Japan's plan to continue the activities of our Clearinghouse Task Force and to hold further discussions with Tocom and other leaders and interested parties to encourage the actions we have recommended," said FIA-Japan Chairman Mitch Fulscher. "We believe this initiative is essential for the success of the commodities industry in Japan."

Please contact FIA-Japan's executive secretary, Ms. Motoko Ogawa, for more information about this report.

Click here to read the report in English

Click here to read the report in Japanese

FIA Japan Chapter publishes November 2008 newsletter

To read the latest newsletter please click on the link(s) below.

FIA Japan Chapter publishes January 2009 newsletter

To read the latest newsletter please click on the link(s) below.

Click here to read newsletter in English

Click here to read newsletter in Japanese

FIA Japan Chapter publishes November 2008 newsletter

To read the latest newsletter please click on the link(s) below.

Click here to read newsletter in English

Click here to read newsletter in Japanese

FIA Japan Chapter publishes September 2008 newsletter

To read the latest newsletter please click on the link(s) below.

Click here to read newsletter in English

Click here to read newsletter in Japanese

FIA Japan Chapter publishes July 2008 newsletter

To read the latest newsletter please click on the link(s) below.

Click here to read newsletter in English

Click here to read newsletter in Japanese

FIA Japan Chapter May 2008 newsletter

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Click here to read newsletter in Japanese

Commodity Clearinghouse Task Force – Second Report Issued

FIA Japan issued a second report in July 2008 with recommendations for improvements in the clearinghouse function for the commodities industry in Japan; This report has been sent to the commodities regulators and the JCCH. As reported earlier, the FIA-Japan Clearinghouse Task Force issued an Interim Report in April 2008 summarizing our recommendations for improving the clearinghouse function for the commodities industry in Japan, including the identification of several strategic business considerations. Subsequently, a regulators’ study group issued its own report on changes that they believe should be made to the clearinghouse function. We have reviewed the study group recommendations and we have considered several areas where we believe further attention needs to be focused. Our comments and suggestions are included in this “follow-up report”.  Our report also includes certain overall comments about the current status of the commodities industry in Japan as well as our suggestion to expand the scope of the clearinghouse project. Detailed recommendations included in the follow-up report cover the following areas: financial considerations (clearinghouse capital), corporate governance and management requirements (including conflicts of interests issues), operations planning (including planning for higher expenses and paying interest on deposits), clearing member minimum net capital requirements (such as adoption of global standards of calculation), and position transfers, give-ups and direct market access.

Click here to read the English version

Click here to read the Japanese version

Recently we obtained an English translation of a report issued by the Japan Securities Clearing Corporation (JSCC). This report is the “Comprehensive Improvement Plan of the Risk Management System”. It includes changes which will be put into place related to collateral and margining and other areas related to risk management including the timing of cash movements and updating of information. Many of the changes will be effective in June and July this year.

JSCC is the clearinghouse for cash securities transactions executed on the stock exchanges in Japan, as well as the clearinghouse for the derivatives traded on TSE. Other derivatives exchanges including OSE, TFX have their own separate clearing organization.

The changes are primarily an upgrading of procedures to bring JSCC closer to global standards. However, most of the changes have already been in place at TFX and OSE. One area of concern by member firms relates to the valuation of bonds as collateral. This will require additional systems changes. This area should require coordination with the other exchanges as it provides a complex method for valuation not currently used by the other exchanges. Implementation of this change is currently scheduled for 2009.

Regards,

Mitch Fulscher

Commodity Clearinghouse Task Force – Interim Report Issued
The FIA-Japan Task Force issued an Interim Report with recommendations for improvement in the clearing function for the Japan commodities markets. This report was delivered to METI in connection with their study of the clearing function. The Report contains strong recommendations for improvements in clearing procedures and controls particularly with respect to financial safeguards and risk monitoring. There are serious shortfalls in the current system. In Japan. The Task Force considered the function and methods used by clearinghouses in the US and Europe, and has evaluated its application to the Japan commodity markets.

The Interim Report contains recommendations in the following areas:

Current Members

FIA-Japan is the only truly international organization in Japan dedicated to spreading the understanding and appreciation of futures and options markets, including commodity markets as well as all financial market instruments. The FIA-Japan Chapter was organized in 1989 as a nonprofit organization by foreign and Japanese futures industry participants representing the entire cross section of the futures industry.
Its current membership consists of over 50 foreign and domestic organizations, bringing together FCMs, securities firms, banks, futures exchanges and futures associations and other professional firms and technology providers to the industry.
The Chapter monitors and comments on Japanese legislative and regulatory developments and exchange rules affecting the futures and options markets and its participants. It provides a forum for discussion of industry matters and provides training, seminars and information about Japan and international market practices and regulations.