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The first Japanese futures

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How Japan has become more “rice coupons” than rice

Modern traders actively participating in the futures market turn it into a kind of pure market math zone. In fact, futures trading has long been detached from reality: only a tiny fraction of contracts are finalized with actual deliveries, turnovers on huge exchanges such as CME far exceed the value of the commodities themselves, and most transactions are reduced to moving money from one pocket to another.

This unusual phenomenon raises questions: how normal is this? The speculative nature of futures trading has increased dramatically since the 1980s, especially after the advent of derivatives on financial assets. With the development of Internet technology, speculation became the dominant interest among futures traders. However, even before this period, futures contracts were often resold so actively that by the time of delivery, the commodity had already changed hands.

The first Japanese futures

Futures provide ample opportunity for speculation, and this property seems inherent. The history of futures contracts in Japan confirms this fact, where the appearance of “rice coupons” at the Dojima exchange in Osaka in 1710 was the starting point. These coupons guaranteed the delivery of grain at a predetermined price and became an independently traded commodity, becoming an object of speculation.

Feudal lords wrote coupons for several years in advance, fixing prices for future harvests. These coupons, which were promises on paper, could change owners repeatedly over several years. By the mid-eighteenth century, the trading volume of “empty” coupons, unconfirmed by actual grain delivery, far exceeded the actual stocks in Japan’s warehouses. Speculative trading in these “empty” promises became the engine of the economy, emphasizing that the essence of futures speculation had not changed in three centuries.

Futures trading on the Binance exchange

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