JAPAN: TOCOM Recognised as Third-Country Market by European Commission

Thursday January 19 2017

On 18th January 2017, the Tokyo Commodity Exchange announced the recognition by the European Commission (EC) as a “third-country market”. This is in accordance with the European Markets Infrastructure Regulation (EMIR), published in the 16th December 2016 edition of the Official Journal of the European Union. Seven other regulated exchanges of Japan also received this recognition, including: the Tokyo Stock Exchange, the Osaka Exchange, the Nagoya Stock Exchange, the Fukuoka Exchange, the Sapporo Stock Exchange, the Tokyo Financial Exchange and the Osaka Dojima Commodity Exchange.

As a result of this third party market recognition, TOCOM is deemed equivalent to EU exchanges and is exempt from the EMIR’s OTC derivatives trade regulations. Notably, the minimum standard margin requirement for OTC derivatives, which is particularly stringent, is not applicable to TOCOM markets.

Additionally, when EU-based non-financial counterparties (NFCs) trade OTC derivatives beyond the clearing threshold, more rigorous reporting and margin requirements are imposed upon them. This may discourage such NFCs from trading on a non-EU exchange without the third country market recognition.

Click here for European Commission Press Release.

Click on the link above for further details.