Osaka Dojima Exchange, Inc. (ODEX) is a Japanese corporation that operates a listed derivatives exchange that follows the tradition of the Osaka Dojima Rice Exchange of the Edo period. Formerly a "Mutually Owned Commodity Exchange" under the Commodity Futures Act, the company was reorganized as a joint stock company on April 1, 2021, and became a "Stock Company Operated Commodity Exchange"" under the same law.
History The Osaka Grain Exchange (the parent of this exchange) was established in Awaza, Nishi-ku, Osaka City, in the tradition of the former Osaka Dojima Rice Exchange, led by Osaka merchants of rice, miscellaneous grains, etc. Osaka's Dojima Exchange takes pride in being the birthplace of futures trading.
As of August 1, 2005, it was organized by 68 members in the agricultural products market, 52 in the agricultural products and feed index market, 46 in the marine products market, 36 in the sugar market, and 18 in the cocoon yarn market. Members included both general members and commissioned members.
In recent years, there has been a concentration of trading on the Osaka Exchange, a member of the Japan Exchange Group (JPX), where similar commodities are listed. The gap between the two exchanges, in terms of traded volume, is large. The current ODEX, like the JPX-affiliated Tokyo Commodity Exchange, is a "Commodity Exchange Corporation" under the Commodity Futures Trading Law, while the Osaka Exchange, Japan's first "Comprehensive Exchange," is a "Financial Instruments Exchange Corporation" under the Financial Instruments and Exchange Law, and thus has a different legal basis.
At the 35th Extraordinary General Meeting (held on March 30, 2012), the introduction of a next-generation trading system was approved, and an order was placed with Intertrade for the "order matching system" and NTT Communications for the clearing system. This next generation trading system added a breadth function to the existing system, further expanding the zaraba portion of the system.
In September 2012, trading was launched with the price-matching session trading, known as itayose, and in October 2018, the system was converted to continuous trading with price and time prioritzation, known as zaraba trading.
In February 2013, the corporate name was changed to "Osaka Dojima Commodity Exchange".
On October 12, 2020, the "Management Reform Council" (Chairman: Professor Takero Doi, Keio University), an expert panel for management restructuring, compiled a final recommendation calling for a "comprehensive exchange" that would handle a wide range of agricultural commodity futures, industrial goods futures, and financial futures in addition to cash-trading and futures on rice. The proposal presented a vision for the future that called for the ODEX to become a competitor to the JPX as a second comprehensive exchange group. The Management Reform Council requested the following management reforms from the management.
The company became a joint stock company by January 2021, aiming to enhance its capital through a capital increase and at the same time operate an exchange with good governance and management efficiency. While calling for investment from rice-related parties and domestic and foreign financial institutions, the management team was renewed. The exchange reviewed its product design, including the introduction of smaller contract and tick sizes, and aimed to expand trading volume as a commodities exchange under the jurisdiction of the Ministry of Agriculture, Forestry and Fisheries, for the time being. The SBI Group will provides liquidity and other support. Even in the event that the main listing of rice futures is not approved and the test listing is terminated, the company will aim to list rice futures again after improving the system.
In April 2021, the company was reorganized into a joint-stock corporation and became "Osaka Dojima Commodity Exchange, Inc." after receiving a two billion yen investment from eight companies, including SBI Holdings, Japannext Securities, Optiver, Okayasu Shoji, and Yutaka Trusty Securities. As a result, SBI Holdings and its subsidiary JapanNext Securities together hold over 33% of the voting rights, making it an SBI-affiliated exchange.
On August 10, 2021, the corporate name became "Dojima Exchange Co" (堂島取引所). This is to clarify its policy of becoming a comprehensive exchange that handles financial futures and options as well as commodity futures and options. Osaka" was also removed from the Japanese name, but retained in the English company name.
On January 16, 2023, the opening of a futures market for precious metals was approved by the government, and futures trading in gold, silver, and platinum began on March 27, 2023.
On August 13, 2024, ODEX listed Dojima Rice Average futures, Japan's first-ever rice futures price index index, linked to the Dojima Rice Average, which is published on the top page of the ODEX homepage on the last business day of each month.
Corporate information Source: Company name Osaka Dojima Exchange, Inc. (ODEX)Type of companyJoint stock companyPresident and CEOWataru ArigaEstablished October 6, 1952Capital 1,089 million yenIssued shares2,518,566 shares Number of Shares of each type: Common: 1,338,566 shares Nonvoting: 1,180,000 sharesNumber of voting rights of the total Shareholders1,338,566Business contentEstablish and provide an exchange market for futures trading to ensure market fairnessNumber of employees28 (as of Oct 18, 2023)Head office1-10-14 Awaza Nishi-ku, Osaka City Osaka, Japan 550-0011
Access: 5-minute walk from Exit 23 of Hommachi Station on the Osaka Metro Yotsubashi Line, Chuo Line, and Midosuji Line.ACCESS MAPTokyo branch officeToranomon No.2 Waiko Bldg. 8FL Toranomon 5-2-6 Minato-ku, Tokyo, Japan 105-0001
Access: 1-minute walk from Exit 2 of Kamiyacho Station on the Tokyo Metro Hibiya Line
ACCESS MAP
Birthplace of futures trading
Origin in the mid-Edo period In the Edo Period, feudal domains collected rice as a tax. They sent the rice to Osaka and Edo (Tokyo) for the purpose of cashing in, except for the amount used for food and stockpiling. At that time, many of the Kurayashiki (warehouses) were concentrated in Osaka and the rice stored there was sold to rice brokers through auctions. Securities called “Rice bills”, which were issued in exchange for the rice, were traded actively. It can be said that rice was securitized. These rice bills also covered unharvested rice. And trading participants could trade futures by contract for difference (CFD) simply by preparing a margin called “shikigin”.
In 1730, a spot market to trade rice bills and a rice futures market located in the Dojima area of Osaka（Dojima Rice Exchange）were authorized by the Edo shogunate. Dojima was equipped with a membership system and clearing functions. Rice prices formed here were transferred to the major cities by couriers. The rules, customs, and functions in Dojima formed the basis of those now in place at modern exchanges. The CBOT (Chicago Board of Trade), which is the oldest commodity exchange in the United States, and the predominant futures market in the world, is said to have been developed based on the Osaka Dojima market.
In that period of time rice could be regarded as a main financial asset of the Japanese people. The DNA of Dojima Rice Exchange (which traded the rice as a futures contract) is being passed down to ODEX, which is currently aiming to develop a wide range of derivative financial products as a comprehensive exchange.
Mark D. West, in his paper entitled, "Private Ordering at the World's First Futures Exchange", laid out eight factors the Dojima Exchange had that are considered to be inherent in futures markets, as identified by Roberta Romano. As such the Dojima exchange is often characterized as the world's first organized futures exchange.
Standardized terms for the trading contracts, including the trading unit, minimum price movements (aka tick size), eligibility of deliverable goods, delivery destination, contract duration, last trade date, establish of a "book" transaction system for recording trades, and a cash settlement system. Futures contracts transferability, the ability to close out a position by placing an opposite trade with another market participant, without having to exchange the underlining product. Auction trading, like that used in "pit trading" such as the infamous Chicago market pits, was a method of trade, negating the need for specialists or intermediaries to make trades. Price limits in the form of a unique "firebox system" which exchange operators used to determine the closing time and subsequently the closing price, and which, internally or inadvertently, discouraged market manipulation. Price discovery, with the futures market opening two hours before the spot market, and with prices immediately transmitted to Edo (Tokyo), using flag signals, smoke signals, and carrier pigeons. Cash settlement as most trades were cash settled, a process made possible by the book transaction system. Implementation of a clearinghouse system whereby the clearinghouses served as transaction intermediaries between trading counterparties. The clearinghouses would guarantee both sides of a transaction, reducing the risk of cost and risk of market transactions. Margination and daily settlement requirements were established by the clearinghouses to mitigate risk. Participants were required to book transactions at the end of the day and pay margin against open positions.
Vision Source:
Dojima Exchange aims to become a "comprehensive exchange that ranks among the world's leading exchanges" with the following three pillars. +Three Pillars of ODEX's VisionCustomer-OrientedTo be convenient to trade and customer driven – providing market infrastructure that can be easily and safely accessed, responding to the hedging requirements of investors and businesses, as well as delivering products attractive to individual investors.Global - a Cross-border Hub Market in AsiaTo be a cross-border, Asia-based, global hub market - providing arbitrage opportunities through collaboration with overseas institutional investors and overseas exchanges.InnovativeTo create new markets to trade alongside the conventional actively traded derivatives, including precious metals and agricultural products, ESG-related resources, stock indexes, foreign exchange, and crypto asset derivatives.
ODEX trading participants Those who can trade directly on the commodity market operated by the Dojima Exchange are called trading participants.The List of Trading Participants, odex.co.jp Trading participants are broadly classified into market trading participants and fiduciary trading participants. Those who are not trading participants trade through fiduciary trading participants.
List of fiduciary trading participants
Fiduciary trading participants trade on their own account as well as offer broker services
+List of trading participants (as of 2023.7.1)ParticipantsAGSUGPMOkachi & Co., Ltd.○○○Okayasu Shoji Co., Ltd.○○○Comtex Ltd.○○Sunward Trading Inc.○○○Nissan Securities Co., Ltd.○○Hoxsin Bussan Co., Ltd.○○Yutaka Trusty Securities Co., Ltd.○○○SBI Securities Co., Ltd.○○ List of marketplace participants
Marketplace participants only trade on their own account; as of July 1, 2023, market participants are as follows: