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Two Japan commodity futures ETFs approved for listing

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Two exchange-traded funds which invest directly in Tokyo Commodity Exchange’s gold futures contract and platinum futures contract have been approved for listing on the Osaka Securities Exchange on 15 February 2010.

These are the first Japanese ETFs which invest directly in the Japanese commodity futures market.

The ETF investing in the gold futures contract is set up and managed by Mizuho Asset Management and tracks the settlement price of gold futures in the back contract month. For the rollover, the new back contract month will only be tracked on and after the first business day of the month following the day on which it was generated.

The other ETF investing in the platinum futures contract is set up and managed by Nomura Asset Management and tracks the performance of the Nikkei-Tocom Platinum Index.

The December 2008 amendment of the Ordinance for Enforcement of the Act on Securities Investment Trust and Securities Investment Corporations of Japan enabled investment trusts to include commodity futures contracts in their portfolios. Thereafter, a number of investment funds have been developed in response to the investors’ growing interest in the commodity markets to diversify their investment.

Tadashi Ezaki (pictured), president and chief executive of Tocom, says: "We expect that the launch of this type of ETF will benefit the commodity market of Japan through an increase in trading activity, and that it will also be well received by pension funds and other Japanese institutional investors, which have so far invested their funds mainly in securities, as a new effective way of starting to invest in commodities. We also hope it would contribute to our goal of strengthening the linkage between financial markets and our market. We believe that this development will increase the competitiveness of the Japanese exchanges, and furthermore, enhance the competitive edge of the financial and capital markets of Japan."

Tokyo Commodity Exchange is Japan’s largest commodity futures exchange with a trading volume of 29 million contracts, representing an 81 per cent market share.

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