1. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 JAPAN COMMODITY MARKET: VISION FOR GLOBALIZATION AND REORGANIZATION Mitch R. Fulscher Chairman FIA-Asia Committee

2. MAY DAY – 2005 “BIG BANG” …FINALLY NEW LAW ENACTED ESTABLISH COMMON CLEARING HOUSE INTERNATIONALIZATION FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

3. NEW LAW  Stronger Net Capital Rules for Brokers  Protection of Customer Assets  Customer Sales Practices Rules  Modernize Exchange Structure

4. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION INTERNATIONALIZATION OF JAPAN COMMODITY MARKET

5. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 Japan Commodity Clearing House Co., Ltd. NOGUCHI, Nobuya Executive Vice President, JCCH VISION FOR GLOBALIZATION AND REORGANIZATION JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

6. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION ＴＧＥＴＯＣＯＭＹ - ＣＯＭＣ - ＣＯＭＫＡＮＥＸＯＭＥＦＦＥ ＪＣＣＨ Ｃｌｅａｒｉｎｇ Ｐａｒｔｉｃｉｐａｎｔｓ

7. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION 1. A common clearing house for all the seven commodity futures exchanges. No direct trading relationship between Sellers and Buyers. No counterparty credit risk. 2. Clearing participants can net all the profits/losses by marking to the market. 3. Clearing processes as a whole become more speedy and simple.

8. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION 4. JCCH collects margins from clearing participants. (Segregation of Funds) (1) Clearing Participants deposit Customers’ margins with JCCH by cash or securities. Customers have a privilege to claim the credits of margins to JCCH when a Clearing Participant defaults. (2) Substituted (Replacement) Deposit is also available for FCMs(clearing participants) with the written consent of customers.

9. Ｃｌｅａｒｉｎｇ Ｐｒｏｃｅｓｓ FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION FCM A FCM B Ｔｒａ ｄｉｎ ｇ 【ＥＸＣＨＡＮ ＧＥ】 Ｃｏｍｍｏｄｉｔｙ Ｍａｒｋｅｔ 【ＥＸＣＨＡＮ ＧＥ】 FCM A FCM B Ｔｒａ ｄｉｎ ｇ Ｃｏｍｍｏｄｉｔｙ Ｍａｒｋｅｔ 【ＣＨ】【ＣＨ】 ＪＣＣＨ FCM A －６０＋４０＝－２０ Ｃｌｅａｒｉｎｇ Ｍｅｍｂｅｒ －６０ ＋５０ －３０ ＋４０ －２０ Ｃｌｅａｒｉｎｇ Ｍｅｍｂｅｒ FCM Ｂ －３０＋５０＝＋２０ ＋２０ ＴｒａｄｉｎｇＣｌｅａｒｉｎｇＮｅｔｔｉｎｇＭａｔｃｈｉｎｇ

10. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION JCCH Overview Date of Incorporation: December 24, 2004 Commencement of Operations: May 2, 2005 Clearing Participants: 118 Participants Capital: 600 million Yen Deposit of Trading Margin: 368 billion Yen Default Funds: 24 billion Yen

11. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 The Tokyo Commodity Exchange HAMADA, Takamichi President VISION FOR GLOBALIZATION AND REORGANIZATION JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

12. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Diversity of product line (2004) Listed commodities

13. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Trading volume 2004 High liquidity

14. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION May 2004 Fimat became a general member. March 2005 Morgan Stanley became a broker member. May 2005 Amended Commodity Exchange Law was enforced. July 2005 Goldman Sachs became a market member. New members

15. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Trades from abroad* 2001-2004 *Foreign trades are the amount of buy and sell by non-Japanese customers. Foreign customer trade breakdown 2004 Foreign participation

16. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Increase of ISVs trade and % of foreign via ISVs 200320042005 Access via ISVs

17. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 Central Japan Commodity Exchange MATSUI, Kohsaku Director, International Affairs VISION FOR GLOBALIZATION AND REORGANIZATION JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

18. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Established in 1996, when three commodity Exchanges in Aichi Prefecture were consolidated, Only comprehensive Exchange in Japan licensed by both METI and MAFF Listing Gasoline, Kerosene, Gas Oil and Eggs, Providingthe World’s Largest Itayose (Session Trading) Market. Who We Are

19. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Over 33 million Over 33 million Contracts Traded in 2004 2nd 2nd Largest Commodity Exchange in Japan 4th 4th among Energy Futures Exchanges in the world 8th 8th Largest Commodity Exchange in the world C-COM Offers Liquid Markets

20. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Ferrous Scrap October 11, 2005 Ferrous Scrap to be listed on October 11, 2005 is a Perfect Futures Commodity Ferrous Scrap (Shindachi, Tokyo) Gasoline Futures Yen-denominated Gold Futures 31.6 15.1 4.0 High Volatility (Coefficient Variance, 2003-2004) High Liquidity Solution for High Cost Inventory

21. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Dollar-denominated Gold Futures Rice Futures LPG (Liquefied Propane Gas) Futures Coal Futures International Commodity Index Futures Weather Futures Upcoming Products Demutualization

22. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION International Affairs Division Created in 2004 Establishing Co-operative Relationship with Major Global Exchanges Application for CFTC Part 30 Exemption Associate Membership Rapid Globalization

23. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Established in March 2005 for Foreign Brokers and Commercial Investors Lower Margin Requirements Applied 23 Associate Members* (From 5 Different Countries) Associate Membership (*As of August 2005)

24. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Thank you for your attention

25. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 Views from a global broker Lionel Ghouila-Houri Fimat Tokyo Business Development, Vice-President VISION FOR GLOBALIZATION AND REORGANIZATION JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

26. Overview FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION 2004 Commodities Exchange Law (“CEL”) Sharp Decline in Trading Volume How to attract Foreign Investors Requests from Foreign Brokers Conclusion

27. Major Achievements of CEL 2004 FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Japan Commodity Clearing House (“JCCH”) Solicitation/Sales rules modernized Risk-based capital requirement A reliable, integrated market place

28. Sharp Decline in Trading Volume FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Frequent Limit stop in energy market Tighter rules for commercial solicitation New capital requirements limits Japanese FCM prop trading

29. Sharp Decline in Trading Volume FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

30. Priority Actions to Attract Foreign Investors FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Number 1 Promote liquidity and unleash volatility by broadening Price fluctuation limits Number 2 Implement “Give-up” mechanism Number 3 Continuous quotation and ISV connections Number 4 Align with international practice for Margining

31. Requests from Foreign Brokers FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Full broker-membership entrance fee too high Transaction costs should be reduced further Harmonious regulatory framework –Between Commodity and Financial regulations –Listed and OTC markets

32. Conclusion FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION From Regulatory view, the CEL 2004 moves in the right direction From a market perspective, some additional steps should be made to bring in more foreign interests: –Free price fluctuation –Continuous trading with ISV connection –Reduction of entrance fees for full membership –Reduction of transaction costs

33. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION Thank You

34. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 Proposition for the market development Yasuo Mogi Senior Vice President ＆ COO Himawari CX, Inc. VISION FOR GLOBALIZATION AND REORGANIZATION JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

35. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION To the Regulators (including SRO) Understandings of International Standard 1 Account Documentation 2 Futures Transactions – Specific Identification method 3 Margin (customer clearing) accounting process 4 OTC vs. ETD (Exchange Traded Products) Consolidated account statement (Domestic and foreign ETD and regulated OTC) 5 English translation of Laws and Regulations

36. To the exchanges 1 Contract design Needs of market participants and customers Market condition and needs 2 Market design Option Spread Evening Session 3 Education FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION

37. To the Clearing House 1 Margin Money Associate with market and portfolio risk Interest on Equity Intraday and Emergency Margin Call 2 Efficiency Position transfer (ex-pit) Simplified give-up process 3 OTC Clearing

38. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA JAPAN COMMODITIES INDUSTRY: VISION FOR GLOBALIZATION AND REORGANIZATION M arket integrity and efficiency can be developed only by the synergy among the regulators and members of the industry i.e. exchanges, clearing house and intermediaries. F CM ｓ are required to develop & maintain high standard of commercial ethics

39. FIA-ASIA DERIVATIVES CONFERENCE BEIJING CHINA AUGUST 11, 2005 JAPAN COMMODITY MARKET: VISION FOR GLOBALIZATION AND REORGANIZATION Thank you