Osaka Dojima Commodities Exchange

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

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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.

History

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In the Mid-17th century, rice wholesaler Yodoya opened Yodoya Rice Market at the storefront on the south side of Osaka Yodoya Bridge.

Around 1697, Yodoya Rice Market moved to Dojima, which is on the opposite bank of Kitahama, and became the Dojima Rice Exchange.

In 1730, under the reign of Yoshimune Tokugawa, the 8th Shogun of Edo Shogunate, the Dojima Rice Exchange - the world's first futures trading market - was officially licensed by Ohoka Tadasuke.

In 1869, the Meiji government abolished Dojima Rice Exchange, which it deemed to be a cause of soaring rice prices.

In 1871, the revival of Dojima Rice Exchange was officially permitted.

In 1873, the Dojima Rice Exchange merged with the Oil Exchange to form Dojima Rice and Oil Exchange (The name returned to Dojima Rice Exchange after that due to the abolishment of the Oil Exchange).

In 1876, the Dojima Rice Exchange became Osaka Dojima Rice Exchange by enacting the Rice Chamber of Commerce Regulations.

In 1893, the Osaka Dojima Rice Exchange was reorganized into the Osaka Dojima Rice Exchange Co., Ltd. due to the enactment of the Exchange Law.

In 1939, the Osaka Dojima Rice Exchange was abolished by the enforcement of the Rice Distribution Control Law.

In 1950, the Japan Commodity Exchange Act was enacted.

In 1951, the Kobe Commodity Exchange opened.

In 1952, the Osaka Grain Exchange was established (former parent of the current Dojima Exchange Co.). The Osaka Sugar Exchange and Kobe Grain Exchange also opened.

In 1953, the Kanmon Grain Exchange opened.

In 1991, the Osaka Sugar Exchange introduced system trading.

In 1992, the Osaka Grain Exchange introduced system trading.

In 1993, the Osaka Grain Exchange, Osaka Sugar Exchange, and Kobe Grain Commodities Exchange mergerd to form the Kansai Agricultural Commodities Exchange.

In 1997, the Kansai Agricultural Commodity Exchange was merged with the Kobe Raw Silk Exchange and renamed Kansai Commodity Exchange.

In 2006, the Kansai Commodity Exchange merged with the Fukuoka Commodities Exchange.

In 2011, the Ministry of Agriculture, Forestry, and Fisheries (MAFF) approved the trial listing of rice futures, and for the first time in 72 years, the rice market was revived and trading recommenced.

In 2013, the Kansai Commodity Exchange was renamed the Osaka Dojima Commodity Exchange by taking the opportunity of accepting the rice market of the Tokyo Grain Exchange.

In April 2021, the organizational conversion from a Member Commodity Exchange to an Incorporated Commodity Exchange was implemented and the name was changed to the Osaka Dojima Commodity Exchange, Inc.

In August 2021, the Osaka Dojima Commodity Exchange, Inc. was renamed Osaka Dojima Exchange, Inc. aka ODEX.

In March 2023, ODEX launched a new precious metals market featuring gold, silver, and platinum rolling spot futures contracts. Simultaneously, night session (T+1) trading began.

In August 2024, ODEX launched Dojima Rice Average® Futures.

Historical notes

Osaka Dojima Exchange, Inc. (Japanese: 株式会社堂島取引所, Hepburn: Kabushiki-gaisha Dōjima Torihikijo; "Dōjima Exchange") (ODEX), formerly known as Osaka Dojima Commodity Exchange (ODEX) until 10 August 2021, is a futures exchange based in Osaka, Japan. It started as the Osaka Grain Exchange in 1952. In 1993 it merged with the Osaka Sugar Exchange and the Kobe Grain Exchange, taking the name Kansai Agricultural Commodities Exchange. The exchange merged with the Kobe Raw Silk Exchange in 1997, becoming the Kansai Commodities Exchange (KEX), and with the Fukuoka Commodities Exchange in 2006. In February 2013 it took over the rice exchange from the Tokyo Grain Exchange and renamed Osaka Dojima Commodity Exchange. For most of its history, this exchange was a membership organization owned by members of the exchange, but it demutualized and became a business corporation (kabushiki gaisha) named Osaka Dojima Commodity Exchange, Inc. on 1 April 2021. In August 2021, the company took its current name, Osaka Dojima Exchange, Inc.

Historical Product Listings

Azuki (red beans) — grade 2 produced in Hokkaidō, other grades or origins at a discount

Coffee index — cash settled average of arabica and robusta on the Tokyo Grain Exchange

Corn 75 index — cash settled average price of corn at Tokyo Grain Exchange, Fukuoka Futures Exchange and Chicago Board of Trade and soybean meal at Chicago Board of Trade

Frozen shrimp — frozen raw headless shell-on black tiger prawns for delivery at Osaka or Kobe

IOM soybeans (possibly GMO)

Non-GMO soybeans — identity-preserved number 2 yellow soybeans of certain United States states origin, delivered in Japan

Raw silk — 27 denier 3A produced in Japan, delivered to Kobe or Yokohama

Raw sugar — from various countries of origin, delivery at various Japanese ports

Rice

Precious metals: Gold, silver, and platinum

Dojima Rice Average®