TOCOM Commodity Market Seminar Hong Kong July 16, 2014 Ryoichi Seki Senior Vice President Global Business Development

TOCOM Overview (1)  Long History in Derivatives Markets  Established in 1984 with the merger of the Tokyo Textile (est. 1951), Tokyo Rubber and Tokyo Gold Exchanges.  Rubber launched in 1952, Gold in 1982, Platinum in 1984 and Gasoline and Kerosene in 1999

 Asia’s Leading Commodity Futures Exchange  Fair and transparent market with open access  Metals, Petroleum and Agricultural Commodities including: • Gold, silver, crude oil, rubber, soybeans, sugar, etc.  Screen-based trading for all contracts  Open for trading 17 ½ each day, covering financial business hours in Asia, Europe and N. America.

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

2

TOCOM Overview (2)

3

 Diverse Market Participants  Foreign Participation: 40% of Volume

 Market Participant Type (Sep 2013)

(Jan - May 2014) Breakdown by Country

HK

47%

USA

24%

Day Session

28%

4%

Night Session

20,000 15,000

15,000

10,000

10,000

5,000

5,000

0

0 10:00 11:00 12:00 13:00 14:00 15:00 15:30

21%

31%

Commercial Prop

 Night Session: 37% of Volume (Jan - Mar 2014) 25,000

Open Interest

13% 22%

Singapore 20% 6% Australia Others

Trading Volume

18:00 19:00 20:00 21:00 22:00 23:00 0:00 1:00 2:00 3:00 4:00

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

37%

44%

4%

Retail Others

Implementing Growth Strategy  Expanding Global Customer Base Through:  Direct Market Access (DMA): broadens access by clarifying legal uncertainties. Recognition by foreign regulators as comparable markets granted by: • DFSA (Dubai) in June 2012 • MAS (Singapore) in June 2014 • Hong Kong: received authorization to provide Automated Trading Services (ATS) from Securities and Futures Commission (SFC) in February 2014  Extended Trading Hours: Effective from July 22, 2014: from July 22

current schedule

Day Session

9:00 am to 3:15 pm

9:00 am to 3:30 pm

Break between Sessions

1h 15m

1h 30m

Night Session

4:30 pm to 4:00 am (Rubber closes at 7:00 pm)

5:00 pm to 4:00 am (Rubber closes at 7:00 pm)

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

4

TOCOM Global Network Service

5

 Low Latency Connectivity, Global Ether-WAN  Go Live on September 16

Tokyo

Latency:122ms(RTD)

TOCOM Proximity DC

CME Group DC (Aurora)

Ethernet Ex:10,30,50,100M

Broker A Rack

TOCOM Matching Engine

Broker B Rack

Carrier Rack

Chicago Ethernet Ex:10,30,50,100M

Protected

Carrier Rack

Xconnect Broker C Rack

Demarcation Point

(** please see below)

Carrier Rack

Protected

Xconnect (* please see below)

Customer Rack

Carrier Rack

Demarcation Point (TOCOM specific termination device is installed) ** “Xconnect cable from Carrier Rack to broker rack should be ordered by broker.”

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

* “Xconnect cable from Carrier Rack to customer rack should be provisioned by CME Co-location user.”

Treatment of Segregation of Customers’ Funds  Trading Commodity Futures in Japan deposit of customer assets

A = 100

Customer

Japanese FCM

deposit of margin

B = 90

Japanese Clearinghouse

C: Amount required to be segregated and deposited with a trust company, etc.

C = A – B = 10

 Trading Commodity Futures outside of Japan Not comparable market

Customer

A = 100

Japanese FCM

C =100 Comparable market

Customer

A = 100

Japanese FCM

B = 90

Foreign FCM

Deposit as Regulated Segregated Customer Funds

B = 90

HK FCM

(c)

(c)

Foreign Clearinghouse

HK Clearinghouse

C = A – B =10 Arbitrage trading on TOCOM market..

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

6

Implementing Growth Strategy  Enhance Exchange functionality to meet the needs of hedgers  Inter-commodity Spreads • Introduced in March 2014 for the Oil market to enable the simultaneous execution two legs of a crack spreads at a specified spread price.

 Asian Precious Metals Benchmark • Exploring the possibility of new benchmark prices for gold and silver during Asian business hours to provide transparent price discovery in the region

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

7

JOE & JCCH for OTC Trading

8

 New OTC market and clearing launched on June 24th, 2014:  Japan OTC Exchange (JOE): TOCOM and Ginga Energy Japan joint venture  TOCOM subsidiary Japan Commodity Clearinghouse (JCCH) provides OTC clearing Products

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.



RIM Swap: Gasoline, Kerosene, Gas oil, Bunker A fuel oil and LSA fuel oil



TOCOM Swap: Crude oil, Gasoline, Kerosene, Gas Oil, Chukyo-Gasoline, Chukyo-Kerosene



LNG Planned launch for cash-settled forwards mid-2014

Comprehensive Energy Market  Providing Extensive Slate of Energy Products Asia dominates the global energy landscape. TOCOM aims to play a key role in developing price discovery and risk management tools with new products and updates to existing energy contracts.  LNG (Liquefied Natural Gas) • East Asia is the world’s largest LNG importing region and is in need of hedging products.

• Our first offering is OTC LNG trading on JOE – to be followed by LNG futures trading on TOCOM.  Electricity • TOCOM is preparing electricity futures as power market deregulation in Japan enters its second phase in 2016.

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

9

Inquiries For more information, please visit our website at: www.tocom.or.jp Or contact us at:

TOCOM Global Business Development Dept. Tel: +81-3-3661-1660 Fax: +81-3-3664-0089 http://www.tocom.or.jp/contact.html

About Tokyo Commodity Exchange (TOCOM) Tokyo Commodity Exchange, Inc. (TOCOM) is Japan’s largest, and one of Asia’s most prominent commodity futures exchanges. TOCOM operates electronically-traded markets for oil (crude oil, gas oil, gasoline & kerosene), precious metals (gold, options on gold futures, silver, platinum & palladium), rubber, and soft commodities (soybeans, azuki, corn & raw sugar). TOCOM leads the Japanese commodity futures market with a share of over 98% in 2013 and volume of 26.8 million lots.

Note: the contents of this document are subject to change. Copyright is the property of Tokyo Commodity Exchange Inc.

10