A Lively Exchange: Tokyo Contingent Visits Kent State Trading Floor for TrainingLike stocks, commodities, such as precious metals, coffee and corn, are traded all over the world, every day. Commodities are viewed as high-risk, potentially high-return investments, compared to other means of investing. However, these commodities can be used equally well as hedges against price movements. When you buy a commodity, you are actually purchasing a specific amount of soybeans, for example, for a specific price. Then you hope that the price will rise so you can sell your soybeans to another investor for more money. The risk, of course, is that the price will fall and you will lose some or all of your money.
The Tokyo Grain Exchange plays a prominent role in the commodities market as the second largest commodities exchange in the world, led only by Chicago. Masanori Hayashi, senior executive vice president of the grain exchange, says his institution is about to undergo a significant change. Hayashi and five other grain exchange representatives recently visited The Olga A. Mural Financial Engineering Trading Floor in Kent State’s College of Business Administration and Graduate School of Management for training on the specifics of continuous trading, as they make the transition from their computer operating system to a new, continuous trading platform. “With our current system, we trade four to six times per day,” Hayashi says. The new system will make trading, well, continuous. Rice, a major staple product for Japan, has not been listed on the exchange since 1940. Recently, Hayashi says, rice production underwent deregulation, making it a tradable commodity once again. “We hope to list rice, using the new platform, in the near future,” Hayashi says. Listing a new contract in rice futures will help stabilize the price of rice in Japanese markets and reduce fluctuations in supply and demand for the commodity. The Tokyo Grain Exchange will be the center of activity for trading in rice futures and lead the market in price discovery, an essential function of futures exchanges. Upon recommendation from internationally recognized futures commission merchants such as Goldman Sachs, Hayashi contacted Dr. Mark Holder, chair of Kent State’s Department of Finance, requesting he design a four-day crash course in continuous trading for the Japanese contingent. The course Holder designed covers topics pertinent to the regulation of continuous electronic markets, a subject with which Holder is quite comfortable, having previously served as a senior economist and group manager at the Chicago Board of Trade. Holder says Kent State has the facilities and reputation to provide training to heavy hitters in the trading business, and he hopes to maintain a close relationship with the Tokyo Grain Exchange. When Hayashi’s group returns to Tokyo, following a brief visit to the Chicago Board of Trade, they will have their work cut out for them. The six have to pass along their new knowledge to the more than 80 grain exchange employees. Hayashi laughs at the thought of all his group has absorbed in the past four days, expressing his satisfaction with Holder’s course and its contents, as well as with the Kent Campus. “This is our first time visiting Kent State,” he says, remarking on how large and well organized the campus is. The College of Business and Graduate School of Management boasts nationally ranked programs at the undergraduate and graduate level. Among them is the interdisciplinary Master of Science in Financial Engineering degree, implemented through the departments of mathematical sciences, finance and economics. The program currently is ranked 13th among financial engineering programs in North America by Global Derivatives, an organization that evaluates graduate programs in financial engineering and mathematical finance.
by
Lisa Lambert  |
Print
Send
