In a bid to improve market liquidity and better serve the hedging needs of commercial customers, the Tokyo Commodity Exchange has decided to halve the trading units currently used for its silver and aluminum futures.
Starting with the October 2007 contracts that will begin trade Oct. 27, the contract unit for silver will be cut to 30 kilograms from 60 kilograms and the contract unit for aluminum will be dropped to 5 tons from 10 tons, the bourse said in a statement Wednesday.
The sharp rise in prices for many international commodities from last year has resulted in increased volatility and greater hedging demands.
The bourse is taking these steps to provide the liquidity and price-setting functions needed to meet these requirements.
Japan's largest exchange for commodities futures also plans to double the size of customer position limits for these two metals.
In the case of silver, the limit on open interest will be doubled to 6,000 contracts.
The benchmark August silver contract ended Wednesday's session up Y7.3 at Y451.8.
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