Dubai: Dubai Gold and Commodities Exchange (DGCX), a financial and commodity derivatives exchange is getting ready to launch a spot gold contract and a number of commodities, equity and currency derivative contracts between now and the end of the year, said Gary Anderson, CEO of DGCX in an interview with Gulf News.
The exchange primarily focused on derivatives is all set to launch a spot gold contract this year that is expected to make Dubai a major price discovery centre for the precious metal.
“We are working on the spot gold contract’s specifications and timing of the launch. We expect to launch it next 2 to 3 months. The reason for the spot gold is to create a contract that is very much regionally and Dubai relevant asset class,” said Anderson.
Now up to 40 per cent of the gold traded in the world comes through Dubai. The city has a robust gold eco-system that constitutes of importers refiners and exporters, an active gold trading market and a derivatives market. One thing that is missing in this market is the physical spot gold trading and benchmarking. The product is expected to create arbitrage opportunities for multi-market participants as DGCX’s dynamic price quotes will be available on its screen throughout the trading session.
In currencies, the exchange currently trades six contracts. As part of expanding its currencies product portfolio, the exchange is working on the launch of a number of emerging market currency contracts that includes currencies such as the South African rand, the Russian ruble the Korean won and the Chinese renminbi. At the moment the exchange is working on regulatory approval to launch these new contracts before the year end.
On the equity front too, the exchange is looking to diversify the asset classes on offer. “We have a licence to list a futures contract on the MSCI Indian fund. The process is very much under way. We are almost finalising product specification and are intending to launch within the next 3 to 4 months,” Anderson said.
In regional equities, DGCX has plans to strengthen its relationship with MSCI and create equity derivatives on UAE and GCC indices. “The equity markets in the region are developing now and it needs a derivative component. One of the issues is that there are two indexes that cover the UAE, really we need one index that captures the whole UAE market that will give people to participate in the UAE market,” said Anderson.
The exchange has been looking for opportunities to launch futures contract on agricultural products form sometime. “It has always been there on our product radar. This again is one area where we are trying to leverage on the trade aspect of Dubai. Anything between 10 to 15 per cent world crops come through Dubai,” he said.
The exchange is currently studying the potential of a black pepper futures contract.
