Frequently Asked Questions: Japanese Power Futures

  • 15 Jan 2021
  • By CME Group
  • Topics: Energy

1. What are the contract specifications?

East Japan

Contract Title

Japanese Power (Day-Ahead) Tokyo Base Load Month futures

Japanese Power (Day-Ahead) Tokyo Peak Load Month futures

Code

 JBT

JPT

Settlement Method

Financial settlement

Financial settlement

Contract Unit

JPY/KWh

JPY/KWh

Minimum Price Fluctuation

0.001 JPY/KWh

0.001 JPY/KWh

Contract Size

One MW x 24 hours x # of days in the contract month

One MW x 12 hours x # of days in the contract month

Listing Schedule

Monthly contracts listed for the current year and the next calendar year.

Monthly contracts listed for the current year and the next calendar year.

First Listed Month

March 2021

March 2021

Block Trade Minimum Threshold

Five contracts

Five contracts

Termination of Trading

The Japanese business day prior to the last day of the current contract month.

The Japanese business day prior to the last day of the current contract month.

Settlement Period and Floating Price

The floating price for each contract month is equal to the arithmetic average of JEPX Spot Market (Day-Ahead) for the Tokyo Area Base load 30 minutes prices (0:00~24:00) for each calendar day during the contract month.

The floating price for each contract month is
equal to the arithmetic average of JEPX Spot Market (Day-Ahead) for the Tokyo Area Peak load 30 minutes prices (from 08:00 to 20:00) for each week day (Mon-Fri) during the contract month not defined as Japanese national or bank holidays.

West Japan

Contract Title

Japanese Power (Day-Ahead) Kansai Base Load Month futures

Japanese Power (Day-Ahead) Kansai Peak Load Month futures

Code

 JBK

JPK

Settlement Method

Financial settlement

Financial settlement

Contract Unit

JPY/KWh

JPY/KWh

Minimum Price Fluctuation

0.001 JPY/KWh

0.001 JPY/KWh

Contract Size

One MW x 24 hours x # of days in the contract month

One MW x 12 hours x # of days in the contract month

Listing Schedule

Monthly contracts listed for the current year and the next calendar year.

Monthly contracts listed for the current year and the next calendar year.

First Listed Month

March 2021

March 2021

Block Trade Minimum Threshold

Five contracts

Five contracts

Termination of Trading

The Japanese business day prior to the last day of the current contract month.

The Japanese business day prior to the last day of the current contract month.

Settlement Period and Floating Price

The floating price for each contract month is
 equal to the arithmetic average of JEPX Spot Market (Day-Ahead) for the Kansai Area Base load 30 minutes prices (0:00~24:00) for each calendar day during the contract month.

The floating price for each contract month is
equal to the arithmetic average of JEPX Spot Market (Day-Ahead) for the Kansai Area Peak load 30 minutes prices (from 08:00 to 20:00) for each week day (Mon-Fri) during the contract month not defined as Japanese national or bank holidays.

2. What is the launch date?

February 8, 2021

3. Why is CME Group listing Yen-denominated Platts JKM futures and JCC futures?

CME Group is already listing the widest set of LNG related contracts with its global benchmark NYMEX Henry Hub as well as Platts JKM futures, JCC (detailed) futures, and Dutch TTF futures.

CME Group new Yen-denominated Platts JKM futures and JCC futures offer additional instruments for power producers in Japan to manage the price differential between LNG and power without taking an exposure on foreign currencies.

4. How can the futures contracts be traded?

The futures contracts are available on CME Globex and for submission as a block trade for clearing via CME ClearPort or CME Direct.

5. The futures contract is available to trade as a block. How does it work?

Subject to certain requirements being met (such as minimum trade size), the futures contract can be privately negotiated via the brokers as a block trade and submitted into CME ClearPort for clearing.

There are minimum quantity and reporting time requirements. The minimum block trade size is five contracts, and trades need to be reported by the broker onto ClearPort within 15 minutes of execution. The definition of Eligible Contract Participant (ECP) can be found in Section 1a(18) of the Commodity Exchange Act. More on block trades can be found in the following links:

- CME Group Rule 526

- What is a block trade?

6. What are the hours for block trade entry into CME ClearPort for clearing?

Trades may be entered into CME ClearPort from 5 p.m. Central Time (CT) Sunday to 4:00 p.m. Friday CT, with a 60-minute pause each day from 4 p.m. to 5 p.m. CT.

60-minute pause: April to October

Chicago

Tokyo

Singapore

4 p.m. Central Time, day T

6 a.m. Tokyo Time, day T+1

5 a.m. Singapore Time, day T+1

5 p.m. Central Time, day T

7 a.m. Tokyo Time, day T+1

6 a.m. Singapore Time, day T+1

60-minute pause: November to March

Chicago

Tokyo

Singapore

4 p.m. Central Time, day T

7 a.m. Tokyo Time, day T+1

6 a.m. Singapore Time, day T+1

5 p.m. Central Time, day T

8 a.m. Tokyo Time, day T+1

7 a.m. Singapore Time, day T+1

7. How do I start trading and clearing these contracts?

There are various ways you can begin trading these contracts depending on your situation, but we have outlined the simplest and most straightforward process below:

contact japanpower@cmegroup.com or any of the inter-dealer brokers (IDBs) that service this market and they will guide you along.

Step 1: Register on CME ClearPort
Step 2: Appoint an inter-dealer broker (IDB) that services this market
Step 3: Request your CME Group clearing firm to permission your chosen IDB for trade submission

Visit our website for more information on getting set up to trade the contract on CME Globex and/or as a block trade on CME ClearPort.

8. What is the listing schedule?

Monthly contracts will be listed for 24 consecutive months. A new monthly contract will be added following the termination of trading in the front month contract.

9. How to trade a quarter, season, or year using monthly contracts?

Block trades can be submitted for a strip of monthly contracts.

Example:

  • In order to trade FY 2021, traders will post a strip of 12 monthly contracts starting with the April 2021 contract and ending with the March 2022 at an average price.
  • The resulting position will be reported as 12 separate monthly contracts.
  • Traders can adjust this position with new trades, either for any separate monthly contract or for the all period by posting another strip.
  • No cascading.

10. What are the underlying reference prices?

The contracts are cash-settled instruments based on a JEPX Day-Ahead prices for Kansai and Tokyo Areas respectively.

11. Which days are excluded from peak load definition?

For the calculation of peak load contracts, the definition of weekdays is important.

Japan public and bank holidays falling on a weekday are not considered in the calculation of the peak load floating prices. (Note: weekend days are similarly excluded.)

12. Can CME Group facilitate block trades submissions?

The CME Global Command Center (GCC) is available to facilitate submission of block trades by email at facdesk@cmegroup.com, provided your accounts are registered in CME Direct or CME ClearPort, credit limits are established, and you or your clients have appropriate product permissions in place.

Additionally, all brokers that execute on your behalf must be enabled with access to your account(s). CME Direct and CME ClearPort both support submission of block trades.

The GCC support hours are Sunday 14:00 (2:00 p.m.) CT through Friday 16:30 (4:30 p.m.) CT. Any email requests submitted outside of our support hours will be reviewed on the following Sunday or the next available trade date. If you have any questions, please contact the CME Global Command Center (GCC) in the US at +1 800 438 8616, in Europe at +44 20 7623 4747, or in Asia at +65 6532 5010.

Resources in Japanese:

https://www.cmegroup.com/ja/trading/cme-clearport.html

https://www.cmegroup.com/ja/trading/cme-direct.html

13. What are the margin levels?

Margin levels (outrights and offsets) are constantly under review and will be updated and listed on the product specification pages on www.cmegroup.com.

14. How can firms follow the block trade activity?

Block trades for the most recent trading day are displayed on the CME Group block trade browser. Data is available for the prior trading days (up to five days) with filters by asset class and product code.

Block trades are also available in real time on CME Direct.

15. How are final settlement prices of the futures determined?

The contracts are based on JEPX Day-Ahead prices for the Kansai and Tokyo areas, respectively.

16. When are the daily settlement prices published?

Daily settlement prices for a trading day will be displayed on the CME Group website after the end of a trading session, which means on the following day in Japan.

17. What is the regulatory jurisdiction of the Japanese Power futures contracts?

The contracts are listed in the US by NYMEX and cleared by CME Clearing. Market participants are subject to the jurisdiction of the Exchange as described in Rule 418. Read more on the Rulebook here.

18. What are the rules governing block trades?

A block trade is a privately negotiated futures, options, or combination transaction that is permitted to be executed apart from the public auction market. Participation in block trades is restricted to Eligible Contract Participants, as that term is defined in the Commodity Exchange Act.

Rule 526 ("block trades") governs block trading in CME, CBOT, NYMEX, and COMEX products. Block trades are permitted in specified products and are subject to minimum transaction size requirements ‒ which vary according to the product, the type of transaction, and the time of execution. Block trades may be executed at any time at a fair and reasonable price.

Block trade reporting, submission, and minimum threshold requirements are set forth in the most current Market Regulation Advisory Notice concerning block trades. That notice is available on the Current Market Regulation Advisory Notices page.

If you have questions concerning block trades, please contact the Market Regulation Department at +1 312 341 7970 or one of the individuals listed in the above-referenced Advisory Notices.

19. What are the fees?

Fees can be found on the CME Group fee schedule.

20. Are Japanese Power futures available for trading on Japan holidays?

Japanese Power futures will follow the CME Group holiday calendar.

Clearing block trades of Japanese Power futures will remain unaffected during Japanese holidays, except for days that are designated CME ClearPort holidays.

During CME ClearPort holidays:

-       Block trade submission may not be possible or follow a special schedule.
-       Block trades may be reported with the next day’s trade date.

Details are available in CME ClearPort trading schedule.

21. What currency is permitted for margin?

Cash variation margin can only be satisfied in Japanese yen. However, initial and maintenance margin can be met with assets in other currencies, including USD. A haircut is applied when using a different currency. For more information, please visit this link.