A rift appeared in the relationship between TOCOM and the futures commodity traders because the so-called“Watanabe memo”containing the president Watanabe’s policy was leaked, and in the end, it developed into an all-out confrontation between the president Watanabe and Mr. Seiki Shimizu, the president of The Federation of National Commodity Futures Traders Association, one of leaders in the commodity futures industry in Japan. It was also a proxy war between continuous trading and call auction trading. It was a victory for Mr. Shimizu, who eventually forced the president Watanabe to resign. However, since most of Mr. Watanabe’s claims were subsequently carried out, after all, there was no winner or loser. After that, there is no doubt that the industry has moved in the direction directed by Mr. Watanabe, therefore, it was the conclusion of the essence of this case.

When describing the president Watanabe, he was often called “self-righteous”. Just after Watanabe memo was leaked, although most executives of the commodity futures traders complained about him, there was no move to force the president to resign. Also, regarding the change policy to continuous trading, the atmosphere was similar to the resignation issue, however, what the industry focused on was the struggle between the president Watanabe and Mr. Seiki Shimizu who was one of the leaders of the commodity futures traders as the president of The Federation of National Commodity Futures Traders Association. Mr. Shimizu was a true believer of call auction trading and made his position clear against continuous trading.

It was at a certain meeting of TOCOM that the rift between the two became decisive. Although this wasn’t the first time the two had a heated argument about “Continuous trading vs call auction trading”, the president Watanabe was angry with Mr. Shimizu who never stopped criticizing and suddenly the president Watanabe declared that further statements were prohibited. Mr. Shimizu kept his mouth shut with an exasperated look on his face when he saw how great Mr. Watanabe’s threatening attitude was.

However, after that, Mr. Shimizu’s anger towards the president Watanabe didn’t subside, and he brought the Complete Book of the Six Laws and repeatedly complained to a Futures Tribune reporter at that time about how unfair the measures to prohibit statements was. The anger seems to have grown over time, and in the end, all the conflicting issues such as continuous trading vs call auction trading and treatment of surplus were unified around anger. After all, the flames of anger spread to the president Watanabe’s self-righteous personality and this led to the appearance of an all-out confrontation between the two sides. In addition to this, the fact that the two were born in 1915 may have spurred the conflict. At the time, the president Watanabe envisioned TOCOM ’s future vision and he was doing it in quick succession. There was no time to delay or compromise. Naturally, the criticism and antipathy of the commodity futures traders must have been factored in to some extent. However, if he listens to every opinion, his belief that the reforms would end halfway probably prevailed. For him, TOCOM was an existence that set it apart from the traditional commodity futures industry. Therefore, he had no hesitation about not following the traditions of the past. However, this attitude has led to the reputation of being self-righteous. In addition, it was also true that he has behaved in a way that disrespected the commodity futures traders. At the founding party of TOCOM, he stated “Guys of the commodity futures traders” at his address and the word caused controversy.

Before the president Watanabe, a Ministry of International Trade and Industry (MITI) alumnus, became the first president of Tokyo Gold Exchange, he held important positions such as the president of the Small and Medium Enterprise Finance Corporation that was said to be the place where the Vice-Minister of Administrative Affairs of MITI would assume the post. Therefore, he must have had a passion and pride for changing the industry on his own.

On the other hand, Mr. Shimizu was from Oarai-machi, Ibaraki prefecture. After graduating from a higher elementary school, he went to Tokyo and got a job in the stock department of Ohno-Tohjiro Store. When the store’s business deteriorated, he went to China. In Mukden, Manchuria, he worked at Shinko Yoko which traded stocks, and after that, due to business deterioration of the store, he went to Korea and worked at Shirai-Yunosuke Store which was a member of Korea Stock Exchange. After that, because he foresaw the severity of the situation in World War II and predicted a stock market crash, he was treated as a non-citizen, and he got tired of staying there and returned to Japan. It was January 1945, a little over six months before the end of the war. However, he got naked in the Tokyo air raid on March 10. Although he took refuge with his older sister who lived in Mito, Ibaraki prefecture, he became penniless by the naval gunfire and the air raid on August 10. Nevertheless, he appeared in Kabuto-cho, the center of the securities industry when stock trading resumed after the war. And then, he was standing on the street doing something like a stock tipster. His stock predictions were correct several times, so he set up a company called“Seiki Joho Sha”, which deployed to“Kanetsu Shoji Company Limited”later. He was a genuine commodity futures trading man who literally rose from the naked body, and he had great pride in being a leader in the commodity futures industry. When he was the chairman of Kanetsu Shoji, the company was adjacent to Tokyo Grain Exchange (TGE). Therefore, he was attached to agricultural futures markets and was particularly eager to revive rice futures trading.

He continued to claim that call auction trading was the most proud of in the world. It was because he has understood how continuous trading worked from his experience in the securities industry. One day, when a fraud incident involving a broker who exploited continuous trading at the Chicago market was discovered, he made the following comment on the Nihon Keizai Shimbun newspaper:
“This incident can be said to be unavoidable in continuous trading where a large number of buyers and sellers find a partner like group matchmaking. After buying a product for 100 yen, a broker pretends that he bought it for 101 yen, and sells it to a customer and can swindle the difference.”

The argument of continuous trading sparked a conflict between TOCOM side and TGE side, that deepened their grudges. It evolved into a public debate in the commodity futures industry, where both sides talked each other about the superiority of their own trading system and pointed out the disadvantages of the trading system on the other side.

In addition, the president Shimizu expressed behavior unbecoming of the president of Mr. Watanabe. Moreover, he prepared a notice called “A blood warrant”and submitted it to the relevant organizations.

As a result, the president Watanabe suddenly submitted his resignation on June 30, 1987.

There was a lot of speculation behind the scenes regarding this incident, but Mr. Shimizu never talked about its details in his life.

(the end)

（Futures Tribune・issued December 3, 2024 ・no.3328）