UK-based Patsystems has won a development contract with the Tokyo Grain Exchange (TGE) to provide the technological infrastructure for delivering a continuous market in rice futures.
The TGE will use the vendor's exchange systems technology to integrate its existing session-style trading with continuous trading. The new platform will comprise of Patsystem's J-Trader front end, an order management system and a matching engine.
Patsystems says the contract is expected to generate revenues of £4 million over the next five years, including a substantial element of sourced hardware at a very small margin, and ongoing licence revenue for J-Trader front-end based on the number of users, which is likely to begin at the turn of the year 2005/2006.
The contract also has a provision for further development to integrate continuous and session markets from a trading screen with a single clearing and settlement system. Patsystems says when implemented, this will be the first system in the world to accommodate both continuous and session-style trading on a single platform.
Takao Morisane, chairman, TGE, says: "We are looking to develop a state of the art system that will have an open architecture to provide access to overseas participants through volume contributors such as ISVs. We are thinking of launching the rice contract (currently under consideration) within a continuous market environment, and as a result we decided to select the proposal submitted by Patsystems."
Since 1996 Patsystems has provided four of the five Japanese electronic commodity exchanges (including the TGE) with its session-based trading technology.