Japan Exchange Group, Tokyo Commodity Exchange confirm merger plans, enter into agreement

Maria Nikolova

JPX is set to conduct a tender offer for the issued shares of TOCOM to convert TOCOM into a wholly-owned subsidiary of JPX.

There is a major deal looming in Japan, as confirmed today by Japan Exchange Group, Inc. (JPX) and Tokyo Commodity Exchange, Inc. (TOCOM). Today, the Exchanges announce that they have agreed to pursue the realization of a business combination and have entered into a basic agreement. 

The idea is to create a one-stop exchange or a “comprehensive exchange”. Although such entities have become mainstream in the world, in Japan, multiple exchanges are established based on different legal bases, which results in inconveniences for investors and a challenge for securing the sustainability of Japan’s commodity derivatives market. Given such a situation, the companies have discussed and examined ways to maintain and strengthen the competitiveness of Japan’s derivatives market from various perspectives. Accordingly, the Companies have determined that the best solution would be to combine their respective strengths to realize a comprehensive exchange.

In order to realize the Business Combination, the Exchanges are considering having JPX conduct a tender offer for the issued shares (including non-voting shares) of TOCOM to convert TOCOM into a wholly-owned subsidiary of JPX. In the event that JPX fails to acquire all of TOCOM’s issued shares (including non-voting shares) through the tender offer, JPX will conduct a demand for share, etc. cash-out and a series of other procedures based on the Companies Act to make JPX the sole shareholder of TOCOM.

The companies explain that after the Business Combination, at the earliest possible date around FY2020, all listed commodity component products on the Precious Metals, Rubber, and Agricultural Product & Sugar Markets will be transferred from TOCOM to OSE. The listed commodity component products on the Oil and Chukyo Oil Markets will not be transferred for the time being. Listing of new oil-related listed commodity component products on OSE will be discussed between the companies.

In addition, JPX and TOCOM aim to list and handle Electricity and LNG products in TOCOM’s markets.

The companies have also agreed to consolidate Japan Commodity Clearing House Co., Ltd., a TOCOM subsidiary, into Japan Securities Clearing Corporation, a JPX subsidiary, after the Business Combination.

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