TOCOM and S&P Global Platts Sign Memorandum of Understanding

TOCOM and S&P Global Platts Sign Memorandum of Understanding

The Tokyo Commodity ExchangeInc. (TOCOM) and S&P Global Platts (Platts), announced today that they have signed a Memorandum of Understanding (MOU), to cooperate in developing active markets and benchmark prices for Japanese domestic oil refined products and liquefied natural gas (LNG) in Asia.

Under the terms of the MOU, both parties will share their expertise in relation to LNG and Japanese domestic oil refined product prices, and will work together to accelerate the development of derivatives products based on such prices with the aim of enhancing risk management and market transparency for the benefit of all market participants.

Takamichi Hamada, President and Chief Executive Officer of TOCOM, said “We are excited to embark on this cooperative effort. Platts’ assessment prices are highly relied upon as benchmark prices by market players, which is demonstrated by the high liquidity of the TOCOM Dubai Crude Oil Futures that is settled against Platts’ Dubai assessment. We believe that our joint efforts based on this MOU to develop LNG and domestic oil refined product markets will bring great benefit to players in these markets. For LNG in particular, we believe that developing a mechanism by which the trades at JOE’s planned physically deliverable market are reflected in Platts’ assessment, will lead to the “creation of a proper price discovery mechanism” by “adding spot trading functions.” to JOE’s market, which is proposed in the “Strategy for LNG Market Development” published by the Japanese Ministry of Economy, Trade and Industry (METI) in May 2016.”

Martin Fraenkel, Platts President, said: “We are proud to be working alongside TOCOM to serve the needs of participants in the Japanese oil and gas market ecosystem. As Japan moves towards increased energy market liberalization, we have invested to launch new price assessments that meet the specific needs of the Japanese market. We look forward to announcing complimentary products and services with TOCOM aimed at enhancing price transparency and market efficiency.”

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