CME Launches New Japanese Electricity, LNG Contracts
CME Group January 6 said it will launch four new Japanese electricity futures contracts and two new LNG futures contracts for trading on February 8, pending regulatory review.
"The Japanese wholesale electricity market is now fully liberalised with hundreds of retail firms and producers, creating an opportunity for a more robust derivatives market alongside it. We are pleased to launch these new futures contracts that offer participants an efficient risk management tool," said Izumi Kazuhara, CME Group head of Japan. "At the same time, the launch of the two new yen-denominated LNG contracts will be relevant for market participants who want to trade the spread between LNG and electricity futures."
The new electricity contracts include: Japanese power (day-ahead) Tokyo base-load futures, Japanese power (day-ahead) Tokyo peak-load futures, Japanese power (day-ahead) Kansai base-load futures, and Japanese power (day-ahead) Kansai peak-load futures. They are financially-settled in Japanese yen using the arithmetic average of the 30-minute Spot Market (day-ahead) prices published by the Japan Wholesale Power Exchange (Jepx) for the relevant region (Tokyo or Kansai) based on base/peak loads over the period defined by the contract.
The new LNG contracts will be denominated in Japanese yen and include the Japan Korea Marker futures (a daily market assessment for front-month LNG delivered to northeast Asia published by Standard & Poors Global Platts) and the Japan Crude Cocktail (Detailed) futures. The former is a financially-settled contract while the latter is a financially settled contract based on the average price of nine custom-cleared crudes reported by the Japan ministry of finance and customs.
CME Group's Japanese electricity and LNG futures contracts will be available on CME Globex, for submission for clearing through CME ClearPort, and will be listed with and subject to the rules and regulations of Nymex.
Japanese power prices have rocketed in the present spell of cold weather. Demand for LNG has pushed the JKM above $14/mn Btu. Utility Tepco has been warning of black-outs unless it can procure power from other companies in Japan, according to business daily Nikkei.