JPX Announecs Implement of Blockchain Technology Utilization for Rubber Futures Settlement by Delivery as a First Shot

Japan Exchange Group, Inc. (JPX) today announced that, with cooperations of the stakeholders, starting from January 2023, Japan Securities Clearing Corporation, CCP under Japan Exchange Group, Inc., implements a blockchain technology in the settlement by delivery of rubber futures, as a first shot of its utilization of a blockchain technology.

Currently, a settlement by delivery of Rubber Futures is performed through an exchange of a document called "delivery order," which allows its holder to receive a delivery of rubber. Going forward, the delivery method will migrate to an on-line exchange of a token recording the delivery order information using blockchain technology, according to its press released.

The implement of the technology utilization for Rubber (RSS3) Futures settlement at Osaka Exchange, Inc. starts from the delivery for Jan. 2023 Contracts Month Contracts (Date of Settlement by Delivery: January 31, 2023 (Tuesday)). Total of 13 firms consisting of selling/buying Clearing Participants and clients in the settlement by delivery of rubber, and warehouses taking custody of rubber to be delivered

By this, the delivery order process, such as preparation and delivery, that have been performed among seller/buyer/warehouse at each time of the settlement by delivery of rubber, will no longer be necessary and the settlement by delivery will complete on-line, and thus an efficiency of the settlement by delivery will be enhanced.

Besides, the exchange plans to expand the utilization of blockchain technology to precious metals in the future. A settlement by delivery of precious metals, such as gold, silver and platinum, which are more liquid than rubber, is currently performed through an exchange of the securities called "warehouse receipts."

Unlike delivery orders, warehouse receipts are securities which can also be used as collateral for various trades. Its digitalization is expected to be discussed at the Legislative Council of the Ministry of Justice going forward. 

JPX said: "We will keep our eyes on a status of such discussions and study feasibility of its digitalization as next step."

Digitalization of assets using blockchain technology has already been realized in small-lot securities, such a less liquid real estates or bonds.

Japan Securities Clearing Corporation decided its utilization of Blockchain Technology this time as a first trial in the area of Japanese listed products trading. 

The clearing institution said: "(We) will strive for an enhancement of settlement efficiency through implementation of new technologies as well as strengthening of its response capacity for the future with a view to a possible expansion of utilization of new technologies like this in the trading and clearing/settlement of more liquid listed products and OTC products."