Osaka Exchange to list Shanghai natural rubber futures

Osaka, Japan – Osaka Exchange (OSE) has launched a public consultation and signed a deal to list Shanghai natural rubber (NR) futures by 26 May.

The futures are “cash-settled futures whose underlier is the price of NR futures listed on the Shanghai Futures Exchange (SHFE),” announced OSE in a 15 Jan signing ceremony with SHFE.

OSE expects that the new product to provide “hedging tools” to manage price fluctuation risks with Japanese and overseas corporations holding NR inventories in China.

The service will also provide “new arbitrage trading ecosystems” between Japanese and Chinese rubber futures markets.

The licensing agreement “allows SHFE and OSE to leverage their market and industry positions to deliver Chinese prices to producers and consumers in Japan and beyond,” said Lu Dongsheng, CEO of SHFE.

This, said Lu, provides companies around the globe with additional price information and risk management tools.

Japan’s NR futures, according to OSE president and CEO Yokoyama Ryusuke, is “used by many stakeholders, including the demand side and the supply side… as one of the international benchmarks of RSS3.”

On the other hand, SHFE natural rubber futures have “the most liquidity” in the world and play an important role in procurement and price hedging, the OSE leader added.

The deal between “OSE, which has the world's oldest rubber market, and SHFE, which has the world's largest rubber market is extremely significant in the development of the world's rubber futures market,” he added.

The listing, Yokoyama Ryusuke added, is expected to “expand trading opportunities for various market participants, resulting in further liquidity expansion and market development in the rubber futures markets of both countries.”