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Can Japanese derivatives fight back?
24 August 2011
Japan was home to the world’s first futures exchange and once among its leading venues, but fortune has turned against it. Colin Packham asks how Japan lost its position and whether it can be reclaimed
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Japan
derivatives
futures
The early 18th Century in Japan was a time of great upheaval. A series of poor harvests combined with restrictions on trade had led to a collapse in the price of rice. Rice was essential to Japan not only because it was the staple food, it was also the commodity by which much of the population was paid. Riots met the rise in rice prices. In response, rice brokers on the Dojima Rice Exchange in Osaka began guaranteeing forward prices of rice. The concept of futures was born. For three hundred years, Japan pioneered the derivatives industry and remained a derivatives powerhouse right up until the turn of the century. In 2001, over 118m contracts were traded in the country, representing a 55% share of exchange traded futures and options in Asia and a 3.4% share of the global market. Japan as a derivatives trading market trailed only the US,...
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