Region becoming a forex trading hub
Expansion of markets underlined by 88% growth in DGCX currency futures transactions
Dubai: On-exchange currency trading in the Middle East set fresh records in 2009, with the region emerging as an important trading hub, said Kevin Day, head of relationship management at the Dubai Gold and Commodities Exchange (DGCX).
Day was addressing bankers, currency traders and forex market participants at the fifth Middle East Forex Expo in Dubai on Tuesday.
Speaking on the global currency marketplace, Day said: "The FX market has grown significantly in recent years to reach an estimated daily turnover of $2.5 trillion, backed by greater demand and the increasing trend of deploying highly sophisticated algorithmic trading tools."
The expansion of the region's currency markets is underlined by an 88 per cent growth in DGCX currency futures transactions, comprising euro/dollar, sterling/dollar, yen/dollar and Indian rupee/dollar futures, Day added.
Elaborating on the growing role of currencies in the region, he said: "Currency trading is emerging as an asset class in its own right in the Middle East. This, coupled with today's requirement to manage counterparty credit risk offers a vast growth opportunity for DGCX, its members and the Middle East FX trading community as a whole."
Settlement guarantee
Speaking on the advantages of trading currency futures, Day said the Dubai Commodity Clearing Corporation, the clearing house of DGCX, provides a settlement guarantee fund and has experienced zero defaults since inception.
In comparison, transactions in the spot market are transacted bilaterally, often incurring higher credit default risk.
