UNITED STATES: CME Group Launches Six New Japanese Energy Futures Contracts

Thursday January 7 2021

On 6^th January 2021, the Chicago Mercantile Exchange (CME) Group announced that four new Japanese electricity futures contracts and two new LNG futures contracts will be available for trading on February 8, 2021, pending regulatory review.

The four new electricity futures contracts expand CME Group’s already robust suite of global power futures and options and fill a gap in the Japanese electricity futures market, providing traders a robust platform for block-trade submission to CME Clearing.  The two new LNG contracts provide Japanese power producers a more efficient tool to manage their price risk.

The new electricity contracts include: Japanese power (Day-Ahead) Tokyo base-load futures, Japanese power (Day-Ahead) Tokyo peak-load futures, Japanese power (Day-Ahead) Kansai base-load futures, and Japanese power (Day-Ahead) Kansai peak-load futures.  They are financially-settled in Japanese yen using the arithmetic average of the 30-minute Spot Market (Day-Ahead) prices published by the Japan Wholesale Power Exchange (JEPX) for the relevant region (Tokyo or Kansai) based on base/peak loads over the period defined by the contract.

The new LNG contracts will be denominated in Japanese yen and include the Japan/Korea Market (Platts) futures and the Japan Crude Cocktail (Detailed) futures. The former is a financially-settled contract based on the DES Japan/Korea daily LNG marker (JKM) by Platts, while the latter is a financially settled contract based on the average price of nine customs-cleared crude oils reported by the Japan Ministry of Finance and Customs.

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