July 1 (Bloomberg) -- Tokyo Commodity Exchange Inc. may add copper, zinc, lead and liquefied petroleum gas to its listed products as Japan’s largest raw material bourse aims to boost volumes and return to profit next fiscal year. “I want to realize listing of these new products,” Tadashi Ezaki, the exchange president and chief executive officer, said in an interview yesterday without specifying a timeframe. “We don’t have a domestic futures market for copper although Japan is one of the world’s biggest users.” The bourse, once the world’s second-largest commodities exchange after the New York Mercantile Exchange, has struggled with slumping volumes since Japan strengthened measures to protect individuals from investment in riskier financial assets. Ezaki, who headed the nation’s Agency for Natural Resources and Energy, took office on June 24 after the exchange last fiscal year posted its first loss since it began operating in 1984. “Increasing the number of listed products may be an option for the exchange to take,” said Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. “They need to decide which commodities are suitable for listing by checking company price hedging needs.” Volumes at Tocom, as the exchange is known, fell 13 percent from a year earlier to 41 million contracts in 2008, the fourth year of decline in five. The amount tumbled from the 2003 peak of 87.3 million contracts after laws introduced in 2005 to curb aggressive soliciting of retail investors reduced participation by individuals. The bourse trades gold, silver, platinum, palladium, aluminum, rubber, gasoline, kerosene and crude oil. Declining Trend “Trading volumes at the exchange have been on a declining trend in the past several years because of problems with our system and structure,” Ezaki, 67, said yesterday in Tokyo. “We take this situation very seriously.” China’s three commodity exchanges, closed to foreigners, traded record volumes in 2008, according to the China Futures Association. Combined volumes on the Nymex and Comex divisions of CME Group Inc. increased 20 percent last year, according to the exchange Web site. “We are losing the competition with overseas exchanges,” Ezaki said. Tocom plans to stop the volume decline this fiscal year, introducing on May 7 a trading system that executes larger volumes at faster speeds to boost participation by hedgers and funds, Ezaki said. The exchange also extended trading hours and replaced daily price limits with a circuit breaker that suspends trading for five minutes as part of changes to lure business. Overseas Participants “We have not yet seen a clear sign of an increase in overseas participants,” Ezaki said, adding that the exchange will take additional steps. Business from foreigners represented about 20 percent of Tocom’s total volumes, he said. Besides expansion in listed products, Tocom plans to introduce a so-called market-maker program in October, allowing trading houses or other corporations to quote buy and sell prices for futures contracts, Ezaki said. The exchange will also strengthen its clearing operations, he said. Tocom didn’t rule out a merger with smaller Japanese commodity exchanges, Ezaki said. The Commodity Futures Industry Association proposed in February that Tocom and the Tokyo Grain Exchange, which trades agricultural futures such as corn and coffee, should combine. A merger was favored by 80 percent of brokers surveyed by the association. Trading volumes at Tocom, the TGE, Kansai Commodities Exchange and Central Japan Commodity Exchange dropped 28 percent from a year earlier to 52.9 million contracts in 2008, according to the Japan Commodity Exchanges Committee. Tocom represented 78 percent of the total volumes. Tocom posted a 2.3 billion yen ($24 million) loss in the year ended March 31. It plans to book at least 100 million yen in pretax profit in the year beginning in April 2010 and to list on the stock exchange in the fiscal year starting April 2013.

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