Japan Exchange Group Inc. (8697), the operator of the world’s second-biggest stock market, said it’s in talks to provide its trading system to Tokyo Commodity Exchange Inc.
Tocom, as the bourse for gold, rubber and soybean contracts is known, is examining options beyond next May when its five-year contract to use the trading platform of Nasdaq OMX Group Inc. comes up for renewal, said spokeswoman Sayaka Sato. It may keep and upgrade the Nasdaq system or shift to a platform provided by a different domestic or overseas exchange, she said.
“JPX is in discussions with Tocom,” said Naoya Takahashi, a spokesman for the exchange. “Nothing has been decided at this time.” Sharing systems would bring revenue for JPX and reduce Tocom’s systems development costs, he said.
About 25.5 million contracts changed hands through Tocom in 2012, down from a recent peak of 87.3 million in 2003, according to the bourse’s website. The exchange reported net income of 20 million yen ($201,126) for the year ended March 31, compared with a 205 million yen loss the previous year, as investors increased holdings of risk assets and gold prices reached new highs in February, amid receding risks from Europe’s debt crisis and economic-growth concerns in developing countries, the bourse said.
Tocom President Tadashi Ezaki said on July 12 the bourse is also in talks with CME Group Inc. about the possibility of sharing trading systems and met with CME Chief Executive Officer Phupinder Gill. CME has tentatively offered the use of its trading systems for around 8.5 billion yen over five years, the Nikkei newspaper reported today without attribution. JPX is asking for as much as 7 billion yen for the same period, Nikkei said.
JPX subsidiary Osaka Securities Exchange Co. uses the J-Gate trading system, also developed by Nasdaq OMX, for derivatives. The Osaka bourse and Tocom agreed in December 2010 that the commodity exchange can use the OSE’s J-Gate backup facilities in case of emergencies.
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