CME pioneered trading in financial futures in 1972 when it listed Japanese yen currency futures. Since then, CME has also listed futures and options on the 3-month Euroyen and the Nikkei® 225 stock average. Japanese Government Bond (JGB) futures are the most recent addition to the Exchange’s long-standing mutual offset system with the Singapore Exchange.

CME’s JGB futures give financial professionals a ready method for hedging their long-term Japanese government debt holdings and a way to cross-hedge yen-denominated corporate issues.

The futures contract is based on a ¥50,000,000 face value, 10-year Japanese government bond with a 6 percent coupon, which represents the majority of debt outstanding. The contract cash settles to the opening price of the Tokyo Stock Exchange 10-year JGB futures contract on its final day of trading. JGB futures have an all-or-none threshold of 100 contracts.

CME Japanese Government Bond futures can be used to:

• Hedge Japanese government portfolios,
• Cross-hedge yen-denominated corporate debt,
• Hedge long-term yen interest rate swaps,
• Create yield curve trades when spread against CME Euroyen futures,
• Augment derivative hedges with CME Euroyen futures,
• Trade interest rate differentials between the United States and Japan.