Japan's TOCOM to start trial listing of LNG futures Apr 4 after regulatory approval

Japan's Tokyo Commodity Exchange will list LNG futures as trial listing for three years starting April 4, following Jan. 28 regulatory approvals from Minister of Economy, Trade and Industry Koichi Hagiuda, TOCOM parent Japan Exchange Group said.

The METI minister also approved Jan. 28 to upgrade the status of TOCOM's electricity futures from the trial to the permanent listing, effective April 4.

TOCOM is launching a cash-settled LNG futures contract based in Yen, using the S&P Global Platts JKM for settlement of spot LNG cargoes delivered ex-ship to Japan and South Korea for 15 contract months.

Platts launched the JKM in February 2009. It represents the daily tradable price of spot LNG cargoes delivered into Northeast Asia. Platts launched daily Asian LNG derivatives assessments in June 2012.

Greater liquidity of LNG derivatives has further increased the visibility of the forward curve, with the curve extending longer compared to when JKM derivatives were first assessed in 2012.

Market participants attributed the greater transactional liquidity to an increase in uncontracted LNG volumes, as well as a bigger need for forward risk management using financial instruments.