JOX Adds New Rack Fix, Float and Swap Contracts with Trayport

The J-Oil Exchange (JOX) has added new oil contracts for rack fix, float and swap with the help of Trayport Exchange Systems. Trayport supplies JOX with its GlobalVision Exchange Trading System and the contracts added have extended the number traded on JOX to 609.

JOX was established in 2001 as a market place in which traders could buy and sell physical spot (dated) and forward oil products and paper swaps. Based out of Singapore, it was set up as a new venture with approximately 40 trading companies, and around 80 traders. JOX offers different tiers of membership in terms of participation, and there are currently 29 active trading members covering almost all the main players in Japan, plus some with read-only trader access to prices on the exchange. The product portfolio includes include gasoline, kerosene, gasoil, low sulphur additive oil, A class and high sulphur C fuel oil. These have delivery destinations of Chukyo, Ohnishi, Hanshine and East Japan.

Trayport was able to complete the addition of the additional oil contracts in seven working days to take the new rack fix and float contracts (70 in total) from concept though implementation and testing to deployment. Trayport has worked with JOX since 2007 and Trayport’s team based in its Hong Kong regional office completed the recent project.

“We believe JOX’s model for offering domestic oil contracts electronically has been proven a successful one. JOX is the only forward contracts oil exchange using electronic trading and it is the only successful IT led oil business in Japan. Trayport’s help in achieving this has therefore been crucial,” said Kazunori Yamamoto, chief operating officer (COO) of JOX and corporate executive officer of Showa Shell Sekiyu KK. “Trayport’s GlobalVision Exchange Trading System represents a US$1m difference in potential revenue gains from our old system, which is a substantial benefit.”

For 2010, JOX wants to add more capability and in doing so increase membership above its 29 main members. These 29 members are the largest corporate trading companies in Japan. To increase membership further will mean JOX targeting small to medium size trading companies and wholesalers.

JOX is also starting to initiate links to clearing houses. JOX expects to see the first cleared transactions on its exchange from the third quarter 2010. Trayport is assisting JOX by building links to clearing systems and also by developing a system to offer bilateral position keeping, a necessity for those hedging physical oil forwards on JOX.


Related reading