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1.1 Introduction to Commodity Exchange

A commodities exchange is an exchange where various commodities and derivatives products are traded. Most commodity markets across the world trade in agricultural products and other raw materials (like wheat, barley, sugar, maize, cotton, cocoa, coffee, milk products, pork bellies, oil, metals, etc.) and contracts based on them. These contracts can include spot prices, forwards, futures and options on futures. Other sophisticated products may include interest rates, environmental instruments, swaps, or ocean freight contracts. Commodities exchanges usually trade futures contracts on commodities, such as trading contracts to receive something, say corn, in a certain month. A farmer raising corn can sell a future contract on his corn, which will not be harvested for several months, and guarantee the price he will be paid when he delivers; a breakfast cereal producer buys the contract now and guarantees the price will not go up when it is delivered. This protects the farmer from price drops and the buyer from price rises. Speculators and investors also buy and sell the futures contracts in attempt to make a profit and provide liquidity to the system. However, due to the leverage provided by the exchange to traders those participating in commodity futures trading face substantial amounts of speculative risk. Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. This article focuses on the history and current debates regarding global commodity markets. It covers physical product (food, metals, and electricity) markets but not the ways that services, including those of governments, nor investment, nor debt, can be seen as a commodity. Articles on reinsurance markets, stock markets, bond markets and currency markets cover those concerns separately and in more depth. One focus of this article is the relationship between simple commodity money and the more complex instruments offered in the commodity markets.
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1.2 Commodities exchanges across the world AFRICA Exchange

Ethiopia Commodity Exchange Africa Mercantile Exchange AfMX Nairobi, Kenya Agricultural,equities and energy products ECX Addis Ababa, Ethiopia Agricultural

Abbreviation

Location

Product Types

AMERICA Exchange
Brazilian Mercantile and Futures Exchange BMF So Paulo, Brazil

Abbreviation

Location

Product Types
Agricultural, Biofuels, Precious Metals Grains, Ethanol,

Chicago Board of Trade

CBOT

Chicago, US

Treasuries, Equity Index, Metals Meats, Currencies,

Chicago Mercantile Exchange Chicago Climate Exchange

CME

Chicago, US

Eurodollars, Equity Index

CCX

Chicago, US

Emissions Energy, industrial

HedgeStreet

California, US

Metals
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Exchange Integrated Nano-Science Commodity Exchange Kansas City Board of Trade Memphis Cotton Exchange Mercado a Termino de Buenos Aires MATba Buenos Aires, Argentina Mercado a Termino de Rosario ROFEX Rosario, Argentina Financial, Agricultural Minneapolis Grain Exchange MGEX Minneapolis Agricultural Energy, Precious New York Mercantile Exchange U.S. Futures Exchange USFE Chicago, US Energy NYMEX New York, US Metals, Industrial Metals Agricultural Memphis, US Agricultural KCBT Kansas City, US Agricultural INSCX United Kingdom Engineered nanomaterials

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ASIA Exchange
Agricultural Futures Exchange of Thailand Bursa Malaysia Commodity Futures Exchange MDEX CFX Malaysia Kathmandu, Nepal Biofuels Agricultural, Precious Metals, Base Metals, Energy. Cambodian Mercantile Exchange CMEX Phnom Penh, Cambodia Energy, Industrial Metals, Rubber, Precious Metals, Agri Commodities. Central Japan Commodity Exchange Dalian Commodity Exchange DCE Dalian, China Agricultural, Plastics, Energy, Agri Commodities Derivatives and Commodity Exchange Dubai Mercantile Exchange Dubai Gold & Commodities DGCX Dubai Precious Metals DME Dubai DCX Kathmandu, Nepal Agricultural, Energy & Agri Commodities Energy Nagoya,Japan Energy, Industrial Metals, Rubber

Abbreviation
AFET

Location
Bangkok Thailand

Product Types
Agricultural

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Exchange Hong Kong Mercantile Exchange Hong Kong Mercantile Exchange Industrial and Mineral Products, Iran Mercantile Exchange IME Tehran, Iran Oil By-products and Petrochemicals Products, Agricultural Products Iranian oil bourse IOB Kish Island, Iran Oil, Gas, Petrochemicals Kansai Commodities Exchange Commodities & Metal Exchange Nepal Ltd. National Spot Exchange Limited [NSEL] Mumbai, India Spot Trading in commodities, ESeries Nepal Derivative Exchange Limited [NDEX] Kathmandu, Nepal Agricultural, Precious Metals, Base Metals, Energy National Spot Exchange Limited Nepal [NSX] Kathmandu, Nepal E-Gold, E-Silver, ECopper, E-Iron, ECRUDE OIL, and COMEN Nepal Gold and Silver KANEX Osaka,Japan Agricultural Hong Kong Gold

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Local Agro Products Mercantile Exchange Nepal Limited Nepal Spot Exchange Limited Ace Derivatives & Commodity Exchange Indian Commodity Exchange Limited ICEX India Energy, Precious Metals, Base Metals, Agricultural Multi Commodity Exchange MCX India Precious Metals, Metals, Energy, Agricultural National MultiCommodity Exchange of India Ltd National Commodity Exchange Limited Bhatinda Om & Oil Exchange Ltd. National Commodity and Derivatives Exchange NCDEX India All BOOE India Agricultural NCEL Pakistan Precious Metals, Agriculture NMCE India Precious Metals, Metals, Agricultural ACE India NSE Kathmandu, Nepal MEX Kathmandu, Nepal Agricultural, Bullion, Base Metals, Energy Agricultural, Bullion Agricultural

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Shanghai Futures Exchange

Shanghai, China

Industrial metals, Gold, Fuel Oil, Rubber

Singapore Commodity Exchange Singapore Mercantile Exchange

SICOM

Singapore

Agricultural, Rubber

SMX

Singapore

Futures & Options contracts in Precious Metals such as physically delivered Gold, Base Metals, Agriculture Commodities, Energy such as WTI and Brent denominated in Euro, Currencies such as Euro-US Dollar Contract, Commodity Indices

Tokyo Commodity Exchange

TOCOM

Tokyo, Japan

Energy, Precious Metals, Industrial Metals, Agricultural

Tokyo Grain Exchange Zhengzhou Commodity Exchange

TGE

Tokyo, Japan

Agricultural

CZCE

Zhengzhou, China

Agricultural, PTA

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1.3 Commonly Traded Commodities

Before the advent of the industrial revolution, trading mainly took place with agricultural commodities such as corn, maize, oats, wheat, livestock, hogs and pigs. In 1848, the worlds oldest futures exchange was formed and it was named the Chicago Board Of Trade [CBOT]. Thereafter, many such exchanges were formed all around the world. The trading is done by contracts, which include 1.) Spot trading, where the delivery takes place immediately or in minimum time, 2.) forward contract, where the buyer and seller agree to a price for a commodity, which is to be delivered at a mutually agreed date and quantity, and 3.) futures contracts, where the conditions are the same as the forward contract, but are transacted through a futures exchange. There are many agricultural and industrial commodities now being traded in the commodities market. The list of the most common commodities and the exchanges they are normally dealt through are given below: The most commonly traded commodity is Crude Oil, and its various derivatives such as heating oil and gasoline. These commodities are mostly traded in the New York Mercantile Exchange [NYMEX], ICE Futures, the Dubai Mercantile Exchange [DME] and the Central Japan Commodity Exchange [C-COM]. The second most traded commodity is Coffee [value wise]. Coffee is mainly traded through the New York Board of Trade [NYBOT], the Kansai Commodities Exchange [in Osaka, Japan], the Singapore Commodities Exchange [SICOM] and Euronext [London]. Common commodities in agriculture include wheat, corn, maize, oats, rice, soybeans and they are traded in the Chicago Board of Trade [CBOT], the Kansai Commodities Exchange [in Osaka, Japan], the Risk Management Exchange [RMX-in Hannover], the Minneapolis Grain Exchange, the Winnipeg Commodity Exchange [WCE], The Tokyo Grain Exchange [TGE] and Euro next.

Animals and animal products such as live and feeder cattle, beef, frozen and
fresh pork bellies and eggs are mainly traded in the Chicago.
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1.4 History of Tokyo Commodity Exchange

Compared to other major commodity exchanges, TOCOMs origins are relatively recent. While many of the other most important exchanges have their roots in the boom of the 19th century, the birth of the Tokyo Commodity Exchange can be traced to the economic reconstruction of Japan after the Second World War. As part of this reconstruction effort, the Tokyo Textile Exchange was founded in 1951 as a focus for the recovering textiles trade in Japan and the wider Far East. A year later the Tokyo Rubber Exchange was founded, with the aim of supporting the similarly recovering rubber trade. It wasnt until 1984, however, that the Tokyo Commodity Exchange was founded. TOCOM was formed from the amalgamation of three previously existing commodity exchanges: the aforementioned Tokyo-based rubber and textiles exchanges, and also the Tokyo Gold Exchange, itself founded only two years earlier in 1982. The latter was perhaps the most important constituent part of the new Tokyo Commodity Exchange, as the trade in precious metals became the primary focus of the new entity. Since its inception, TOCOM has added a number of new commodities to its trading portfolio, including precious metals, non-ferrous industrial metals and crude oil and several of its derivatives. In this way, it has strengthened its position as one of the worlds premier commodity exchanges, with consistently high volumes of trade in some of the worlds key commodities. The Tokyo Commodity Exchange (also known as TOCOM) is not only Japans primary commodity exchange; it is one of the most important commodity exchanges in the world. Its main trade is in precious metals, oil and its derivatives, and rubber, though there is also some trade in non-precious metals.

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1.5 Introduction to Tokyo Commodity Exchange

The Tokyo Textile Exchange with two other exchanges. The Tokyo Commodity Exchange, Inc. (TOCOM) is Japan's largest derivatives platform, offering futures contracts on precious and industrial metals, oil-related energy products, and rubber as well as options on gold futures. On December 1, 2008, TOCOM demutualized and transformed itself from a membership organization into a corporation and changed its name to Tokyo Commodity Exchange, Inc. It was the first commodity futures exchanges in Japan to undergo such a transformation. TOCOM was ranked as the world's 34th-largest derivatives exchange by volume in 2010, falling two places from the previous year, according to the annual volume survey published by the Futures Industry Association (FIA). The FIA report, published in March of 2011, notes that the exchanges's total volume for 2010 declined by 4.3% from the previous year, falling to about 27.64 million contracts.

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Year
1951

Month
February

Description
Tokyo Textile Exchange founded in Nihonbashi Horidome-cho, Chuo-ku, Tokyo

1952 1982 1991 2010

December February April March

Tokyo Rubber Exchange founded Tokyo Gold Exchange founded Continuous trading on electronic platform started Started providing Nikkei-TOCOM Commodity Index market, launched Nikkei-TOCOM Commodity Index futures

The Tokyo Commodity Exchange provides a complete technical and organizational infrastructure for smooth trading and the clearing of exchange trades, and its ongoing information and communications work contributes to the steady growth of supply and demand. Tokyo Commodity Exchange is registered with the Tokyo Stock Options Group.

It has been a full-fledged Limited-risk Options Commission Merchant since 1999 (not just an Introducing Broker), which means that it exceed the industry's most demanding capital levels and are subject to the industry's most rigorous oversight and financial reporting requirements. Tokyo Commodity Exchange, Inc. (TOCOM) strives to become a prominent derivatives exchange in Asia. TOCOM introduced its new system, which meets international standards on functionality and has the worlds highest level of performance, on 7 May 2009.

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1.6 TOCOM Trading System

TOCOM selected a trading/clearing package provided by NASDAQ OMX Group, which already provides since its establishment in 1984 operational support and system implementation to many overseas exchanges. NTT Data, in collaboration with NASDAQ OMX, developed and operates the new system. NTT Data has a high level of know-how based on its over seventeen years of experience in developing/operating the Exchanges systems. The Exchanges electronic trading system offers the following speed and capacity: Order Transaction Response Time: 10 milliseconds. Maximum Number of Order Transactions: 1,000 orders/second (or 5 million orders/day). Maximum Number of Executions: 1.85 million execution/day. By introducing this new system, resulting from the combination of the internationally recognized NASDAQ OMX technology and the exceptional skills of NTT Data in building/operating systems, TOCOM aims to offer a wider range of services to all market participants in a faster and more efficient way, in order for the Exchange to grow and better position itself among global derivatives markets. Gold options were the single-largest product in 2006, accounting for a third of total contract volume, with gasoline futures ranked second at 22 percent, followed by platinum at 16 percent and rubber at 14 percent. The merged exchange started with precious metals, rubber and textiles with the latter withdrawn in 1991. The complex was expanded with palladium futures in 1992, adding aluminum in 1997 and establishing the oil market with futures in gasoline and kerosene - in 1999. An unsuccessful push into Middle East crude oil futures followed in 2001, and gas oil futures - now also suspended - followed in 2003. Options on gold futures were launched in 2004 and the Tocom Index was started in 2006.

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1.7 Trading Schedule

Order Acceptance and Trading Hours Trading hours are separated between a day session (order acceptance: from 8:30; trading: 9:00 to 15:30) and a night session (order acceptance: from 16:45; trading: 17:00 to 04:00 except for the Rubber market). The night session for rubber is from 17:00 to 19:00 (order acceptance: from 16:45).

Commodity
Precious Market Oil Market Chukyo-Oil Rubber Market Market Metals

Day Session
(8:30) 9:00-15:30 (no lunch break)

Night Session
(16:45) 17:00-04:00 (16:45) 17:00-19:00

Clearing Period For a regular business day, one clearing period corresponds to: previous business days night session (from 17:00) + todays day session (until 15:30). The end of one clearing period will correspond to the closing of the day session. The clearing period for the last business day of the year corresponds to: previous business days night session (from 17:00) + last business day of the years day session (until 15:30). The clearing period for the first business day of the year corresponds to: first business day of the years day session (from 9:00 to 15:30) since there wont be a night session following the end of the day session on the last business day of the year. In the case of a holiday, the night session of the day preceding the holiday and the day session of the day following the holiday make one clearing period.

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1.8 Trading Methods

The trading method is continuous trading with an opening auction . At the opening of the day session (9:00) and the night session (17:00), all contract months (all options series) start trading at the same time.

Type of Transaction
Physically Delivered Futures Transactions Cash-settled Futures Transactions Options Transactions Spread Transactions

Trading Method
Continuous trading with opening auction

Continuous trading

Opening Auction: Opening Auction takes place at the start or reopening of a session (following an interruption after a Circuit Breaker has been triggered, for example) and corresponds to a trading method where orders accepted by the Exchanges trading system are all executed at once, in accordance with the conditions prescribed by the Exchange. Under this method, the price at which a maximum number of orders can be executed becomes the execution price (all of the orders are not necessarily executed). Unexecuted orders with an order condition will be kept in the order book in the continuous trading session. Continuous Trading: Continuous trading takes place between the opening and the closing of a session and corresponds to a trading method where orders are executed whenever a match is possible, in accordance with the type of order/condition. Thus, there are many execution prices formed during continuous trading.

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1.9 Order Types

Although the Exchange offers seven types of sell and buys orders, it is possible to produce a variety of orders by specifying the order condition. The order type and order condition must be specified when placing an order. With regards to order types, please note that Members can choose not to use all of the order types offered by TOCOM. Members may also develop their own specific type of order. Limit Order An order to buy or sell with a specified price, a sell LO is executed at the specified price or above, while a buy LO is executed at the specified price or lower. Market Order An order to buy or sell without specifying a price, an MO is executed immediately if there is a corresponding order on the other side of the market, but if there is no corresponding orders on the other side of the market, the remaining part of the order is cancelled (the same shall apply during the opening auction: the MO is executed if there is a corresponding order on the other side of the market, but if there is no corresponding orders on the other side of the market, the remaining part of the order is cancelled). Market To Limit Order Its an order to buy or sell without specifying a price. Depending on the order book at the time that the MTLO was received.

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Best Limit Order An order to buy or sell without specifying a price. When accepted, this order becomes a LO at a price equal to the best bid/offer on the same side of the market. This order will not have Precedence over other LOs at the same price that were placed earlier (in accordance with time priority). If there is no bid/offer on the same side of the market, the order is cancelled. Stop Order Stop Order (no order condition available; valid for current session only an order that can convert into a MO, LO, MTLO, BLO or SCO if the market reaches designated conditions.

LIMIT ORDER
MARKET ORDER STOP ORDER BEST LIMIT ORDER MARKET TO LIMIT ORDER

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1.10 Japan Commodity Clearing House

JCCH was established on December 24, 2004, to conduct an independent centralized Clearing-House operation. It is organized as a stock company owned by all Japanese Commodity Exchanges and the Japan Commodity Futures Industry Association which is an association of FCMs. On May 2, 2005, JCCH started providing clearing and settlement services for the transactions of all commodity exchanges in Japan. These services are integral to the efficient operation of all of the commodity markets, as JCCH imposes itself as the counterparty to each trade. This service provides a high level of market integrity as it minimizes the risk of default by either party to each and every transaction. Market Credibility Efficient Operation JCCH enhances market integrity. JCCH acts as the counterparty to each transaction, thereby minimizing the risk of counterparty default to all market participants. JCCH improves efficiency in investment funds by aggregating the margin and mark-to-market profit or loss. JCCH is the common Clearing House for Commodity Exchanges in Japan, which allows JCCH to adopt SPAN Margining system, permitting to offset risks between Commodity Exchanges and aggregate mark-to-market profit or loss that is generated from all Commodity Exchanges. JCCH provides for efficient management of clearing funds. Prior to the establishment of JCCH, FCMs had to provide clearing funds sufficient to satisfy different exchanges, for both the house account and the customer account. This required managing some different accounts for clearing and settlement. Under the JCCH model, each clearing participant maintains one account at JCCH which is netted based on the daily marking - to - market requirements for all positions held at all exchanges. JCCH allows for the streamlining of back office operations for all clearing participants. As marking - to - market operation and management of margins are integrated through JCCH, there is a reduction in error and a simultaneous corresponding cost savings.

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1.11 Clearing System

JCCH acts as counterparty to every transaction executed on the member exchanges, and insures performance on the terms of the contract to the benefit of all market participants. Execution of trading between clearing participants and non-clearing participants

Execution of trading among clearing participants

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1.12 Commodities Traded at the Tokyo Commodity Exchange

A variety of commodities are traded at the Tokyo Commodity Exchange, falling into three main classes: precious metal commodities and energy commodities. There are also other commodities traded at TOCOM outside these main classes.

Agricultural Commodities: Rubber. Energy Commodities: Crude Oil, Gas Oil, Gasoline and Kerosene. Industrial Metal Commodities: Aluminum. Precious Metal Commodities: Gold, Palladium, Platinum, Silver.

The trading of rubber represents the trade from TOCOMs precursor exchange, the Tokyo Rubber Exchange.

1.13 Membership of the Tokyo Commodity Exchange

There are four levels of membership of TOCOM. These are:

Broker Membership: the standard class for firms of commodity brokers and traders. All members of this class may trade on their own behalf or on behalf of clients, and must be Japanese organizations.

Trade Membership: this class is similar to Broker Membership, but members may only trade on their own behalf: they may not conduct trades for clients. Again, members in this class must be Japanese.

Affiliate Membership: these members may trade through brokers licensed by TOCOM. There is no restriction on national origin for these members: nonJapanese organizations may join.

Associate membership: these members can only be foreign companies etc, but they must be members of an exchange that trades in the relevant commodities, or a trade association connected with that commodity. Associate members may trade through TOCOM licensed brokers.
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1.14 Japan Commodity Trading Advisors

The Japan CTA Association was established in October of 1994 right after the permission for business was put in practice. With the commodity fund law as the base, the association along with the establishment of the self regulations, has been set up in means of cooperation of mutual problems and in aiming toward the sound development of the CTA business. Through this, the association has aimed for contributing toward the development of the economy as a voluntary group of CTAs. As of April 10th 2009, 8 companies are registered as a member of the association. In Japan, with the arrival of the monetary Big Bang, and also with the wave of the deregulation, the needs of the investors are becoming more and more complex each day to find a more profitable investment opportunity. Thus the form of the monetary services is being looked over again. Many services are being designed to match the needs of the investors. One of the services that are being focused on is the commodity fund business which manages the assets by investing in the commodity and monetary markets, and the commodity trading advisor business which are entrusted the investment judgement in mainly the commodity markets. By managing a fair operation in each field, and by fair investment in the commodity market, we will be able to expect an economical meaning through the smooth flow of the production and distribution of each commodity and by the diversification of the investment chances. The commodity trading business along with the commodity fund business (commodity pool business) was proclaimed on May 1991, and enforced in April 1992, based upon the "Commodity Investment Regulations" (so called "commodity fund law") under the jurisdiction of the Ministry of Finance, the Ministry of Agriculture, Forestry and Fisheries and the Ministry of International Trade and Industry.The commodity trading advisor, with the expert knowledge of investment in the commodity futures, commodity index and the commodity option markets are traders who will manage assets entrusted by investors, offering the same services as the securities investment advisor and the CTAs in the US.
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1.15 Commodity Exchange Act

The Commodity Exchange Act (CEA) regulates the trading of commodity futures in the United States. Passed in 1936, it has been amended several times since then. The CEA establishes the statutory framework under which the CFTC operates. Under this Act, the CFTC has authority to establish regulations that are published in title 17 of the Code of Federal Regulations. For convenience, we provide the following links to the CEA and related documents:

Access the Commodity Exchange Act on the Cornell University Law School Website

Commodity Exchange Act-U.S. Code Conversion Chart.The CEA section numbers do not always correspond directly to the sections in the U.S. Code where the CEA is codified. As a research tool, we provide a conversion chart that lists the sections of the CEA and the corresponding sections in the U.S. Code. Section 3 of the CEA, for example, is codified at 7 USC 5. This chart has no legal force and is not intended to substitute for review of the statutes to which it refers.

Commodity Futures Modernization Act of 2000 (PDF) (Appendix E of P.L.106554, 114 Stat. 2763) Title XIII of the Food, Conservation, and Energy Act of 2008, PL 110-246, 122 Stat. 2189, which made amendments to the CEA, and the Conference Report.

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1.16 Fraud Awareness & Prevention

The CFTC's fraud awareness and prevention program involves

Educating futures market users Protecting futures market participants and Reviewing information and complaints that market participants send to us.

The CFTC is the Federal agency that regulates the trading of commodity futures and options contracts in the United States and takes action against firms suspected of illegally or fraudulently selling commodity futures and options. Before you trade in commodities or futures, know the kinds and signs of fraud and the basics of futures trading. Protect yourself from the many types of commodities fraud that exist in todays financial markets. Be suspicious of a promise of high profits with low risk. Scams that falsely promise high profits with low risks are everywhere. Many are targeted at specific ethnic communities using the language of that community, from New York to South Florida, from the Southwest to California, and in other areas. Be wary of any firm or individual offering to sell you commodity futures or options on commodities, including

Precious metals, such as silver or gold Foreign currency, such as Euros, Yen, or Deutschmarks, or Crude oil, heating oil, unleaded gas, or agricultural products such as corn, soybeans, or cattle.

Be wary of any firm or individual offering to trade your money for you in commodity futures or options, or to pool your money with other customers.
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1.17 Warning Signs of Fraud

Get-rich-quick schemes that sound too good to be true. Theres never a free lunch. Be very careful if you recently retired or came into money and youre looking for a safe investment. You could be a very attractive target for a crook. Once your money is gone, it can be impossible to get it back.

Predictions or guarantees of large profits. Always get as much information as you can about a firm or individuals track record and verify that informationeven if you know the people involved or they are recommended by friends or relatives. If you cant get solid information about your investment and the company, dont invest. Before you invest, always check it out with someone whose financial advice you can trust.

Promises of little or no financial risk. Be suspicious if the firm or individual says there is little risk. Be suspicious if someone tells you that a written risk disclosure statement is only a routine formality. Written risk disclosure statements are important to read thoroughly and understand. Claims of trading in the Interbank Market. If a firm claims that they will trade foreign currency for you in the interbank market, or that you should trade in the interbank market, be cautious. The term interbank market refers to a loose network of currency transactions negotiated between financial institutions, usually banks and investment banks, and other large companies. Unsolicited telephone calls about investing. Be skeptical if someone you dont know calls you about investment opportunities.

Someone asking you to send cash immediately. Be very cautious if someone tries to convince you to send cash or transfer money to them immediately by overnight express, the Internet, mail, or any other method.

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1.18 Kinds of Frauds

Foreign Currency Trading (Forex)

Foreign currency trading scams often attract customers through advertisements in local newspapers, radio promotions, or on attractive Internet sites. These advertisements may peddle high-return, low-risk investment opportunities in foreign currency trading, or even highly-paid currency-trading employment opportunities. Precious metals scams often work the same way.

The CFTC urges you to be skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks, or that employment as a currency trader will make you wealthy quickly.

Commodity Pool Operators

Commodity pool operators often solicit investments from friends, neighbors, coworkers, and fellow religious or social group members by using their reputations in the community or their personal relationships. In many cases, however, these investment schemes turn out to be fraudulent, and you can lose your entire investment, in many cases as a result of outright theft.

Individuals and firms that fraudulently solicit funds from investors for commodity futures and options trading are usually not registered with the CFTC. They may operate Ponzi schemes in which little or none of the money sent in by investors is ever invested as promised in the commodity markets. Instead, the operator of the scam steals the funds, and creates the illusion of a successful business by using some of the money put in by later investors to pay phony profits" to earlier investors. This tactic makes it appear to investors that the investment is actually making money, which in turn attracts additional investors.

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Introducing Brokers

Introducing brokers often use advertisements and infomercials on radio and television to promote commodity futures and options. These advertisements may claim that seasonal trends in the demand for certain commodities or well-known current events (such as a hurricane or a terror attack) create an opportunity to make big money by trading in commodity futures and options. They promise quick riches, like turning $5,000 into $20,000 in just a few months, with little risk.

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1.19 Conclusion
Hence we can conclude that. The Tokyo Commodity Exchange, Inc. is Japan's largest derivatives platform, offering futures contracts on precious and industrial metals, oil-related energy products, and rubber as well as options on gold futures. The Tokyo Commodity Exchange provides a complete technical and organizational infrastructure for smooth trading and the clearing of exchange trades, and its ongoing information and communications work contributes to the steady growth of supply and demand. Tokyo Commodity Exchange is registered with the Tokyo Stock Options Group. TOCOM introduced its new system, which meets international standards on functionality and has the worlds highest level of performance.

JCCH was established, to conduct an independent centralized Clearing-House operation. It is organized as a stock company owned by all Japanese Commodity Exchanges and the Japan Commodity Futures Industry Association which is an association of FCMs. JCCH acts as counterparty to every transaction executed on the member exchanges, and insures performance on the terms of the contract to the benefit of all market participants.

The Japan CTA Association was established right after the permission for business was put in practice. With the commodity fund law as the base, the association along with the establishment of the self regulations, has been set up in means of cooperation of mutual problems and in aiming toward the sound development of the CTA business.

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