7.

0 SETTLEMENT AND MARGIN

7.1 Settlement
Generally, any of outstanding contracts must be settled at its maturity date depends on the
types of futures. In Japan, the commodity futures can be settled through physical delivery
and while for financial futures, it must be settled through cash settlement. The settlement
procedure for both commodity and financial futures can be categorized based on its
underlying product as follows:

7.1.1 Commodity Futures

i.

Crude oil
Settlement method

Cash settlement transaction

Final settlement day

A business day following the Last Trading Day

of the current contract month.

Final settlement prize

-Yen-based monthly average of Dubai and Oman

calculated by the Exchange based on the prices
reported by a price information vendor (as a
general rule, plats)(Until May 2015 contract)

7.1.2Financial Futures
In Japan, there are three categories of financial futures that being traded which are equity
futures, bond futures and interest rate futures.
Equity futures
Two main underlying indexes traded in Osaka Stock Exchange are Nikkei Stock Average
(Nikkei-225) and TOPIX futures. The trading for these underlying indexes does not
involve physical delivery and it must be settled by cash settlement. On the last day of
trading, the final settlement price for both underlying indexes is based on a special

opening quotation. The calculation of this special quotation is based on the total opening
prices of each component stock on the business day following the last trading day.
Bond futures

MARGIN
In general, in Tokyo Stock Exchange, the investor is required to make a warranty deposit
or known as initial margin at least 30% of the transaction value or 300,000 yen
(whichever is greater). It should be deposited with Securities Company (Japan Securities
Clearing Corporation) by 11:00 a.m. on the second day of following the trading day. If
the transaction values decrease below 20%, then the investor is required to deposit
additional margin. In case of the balance of initial margin exceeds its updated required
amount, the investor can request a refund of up to the excess amount from Japan
Securities Clearing Corporation.
Under the Japan Government Bond, the investor shall not own or control more than
25,000 contracts net long or net short