Tokyo Stock Exchange to launch first dividend index futures market in Asia

Tokyo Stock Exchange to launch first dividend index futures market in Asia

23/03/10

Tokyo Stock Exchange, Inc. (TSE), one of the leading global exchanges and the largest securities market in the Asia-Pacific region, today announced the launch of first dividend index futures market in Asia which is scheduled for July 26, 2010. The underlying indices for the futures contracts are as follows;

  • Nikkei Stock Average Dividend Point Index
  • TOPIX Dividend Index
  • TOPIX Core30 Dividend Index

TSE will begin calculation and publication of the Dividend Indices for TOPIX and TOPIX Core30 in June, 2010. (For more information, please refer to the attached "Contract Specifications for TSE Dividend Index Futures".)

While Dividend Swaps have been actively traded in the OTC markets, their history is still a short one of about 5 or 6 years. However, the market has expanded all over the world and we understand the daily trading value in Japanese OTC market has reached several billion yen. Considering the dividend amount paid from Japanese stocks has reached the scale of several trillion yen, the market is likely to develop further. Also, in European exchanges, dividend index futures contracts are gathering considerable attention from investors not only as hedging tools for dividend exposure, but also as a new investment vehicle which differs from current listed derivatives.

By listing dividend index futures contracts, TSE will be able to develop market conditions that encourage the participation of a wide range of investors, including those who have not traded Dividend Swaps until now, as well as provide them with services such as increased transparency and elimination of counterparty risks.

In addition to dividend index futures contracts for TOPIX and TOPIX Core 30, TSE is working in cooperation with Nikkei Inc. to launch Nikkei Stock Average Dividend Point Index futures contracts. In this way, TSE will be able to provide a service which meets the needs of an even wider range of investors.

The outline of the contract specifications for dividend index futures is in the process of accepting public comment until April 22.

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Contract Specifications for TSE Dividend Index Futures PDF PDF