In 1730, Japanese merchants petitioned shogun Tokugawa Yoshimune to officially authorize trade in rice futures contract at the Dojima Exchange, the world's first organized (but unsanctioned) futures market. For several years, the Japanese authorities had prohibited the commerce of futures bills because it was widely regarded as a type of betting that caused rice prices to rise.
However, when the price of rice dropped to record lows in the late 1720s, the samurai (whose income was tied to the value of rice) saw their economic standing drop relative to the merchant class, whose growing economic power worried the nation's elites. Without officially sanctioning a futures market at Dojima by easing limitations on futures trading, but the shogun responded. The question now was whether he should heed the merchants' request and take the next step.
The Dojima Rice Market and the Origins of Futures Trading case study solution
PUBLICATION DATE: January 30, 2009 PRODUCT #: 709044-PDF-ENG
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