Tocom deal draws Chinese capital for commodities

The Tokyo Commodity Exchange agreed Sunday to work with a Beijing-based association of futures companies to bring Chinese capital into commodities trading despite that country's foreign investment restrictions.

Beijing forbids direct investment and trading in foreign futures markets by individuals and institutional investors. But mainland Chinese futures companies are allowed to invest in foreign markets via brokers based in Hong Kong.Tocom, led by CEO Takamichi Hamada, and representatives from four other Japanese commodities trading companies codified the agreement with the China Futures Association, which includes futures and securities businesses. The deal, signed in a memorandum at the China International Derivatives Forum in Shenzhen, also includes Hong Kong broker China Xin Yongan Futures.

The Chinese side appears interested in access to Tocom's rubber futures, an international benchmark. Tocom may be seeking Chinese investment in rubber as well as other commodities such as oil and precious metals to liven up trading.

Estimates peg the number of Chinese futures investors at about 1 million. Chinese speculators already influence gold and crude oil in the New York market, as well as nonferrous metals in London.