Dubai goes for gold!

From Day One, DGCX will offer an uninterrupted trading window of more than thirteen hours to provide arbitrage opportunities against Far East, European and American markets.

The exchange is confident that it will see wide participation from approved members from diverse backgrounds such as commodity traders, banks, brokerages and other financial institutions, who will trade and clear their obligations on T+1 basis. The market will ensure that the best risk containment measures are implemented and followed.

A joint venture between the Dubai Metals and Commodities Centre, Financial Technologies (India) Limited and Multi Commodity Exchange of India, the DGCX will be located in the DMCC free zone in the prestigious purpose-built AU or Gold Tower.

Global commodities

With its extensive portfolio of listed commodities including Gold, Silver, Freight, Cotton, Steel and Marine Fuel Oil, DGCX is set to offer an efficient electronic platform for the trading, clearing and settlement of a diverse range of commercially important derivative products. Framroze Pochara, Chief Executive of DGCX comments:

'It is remarkable that DGCX will go live with its trading operations within a year from the launch of the concept. It exemplifies the commitment and sheer hard work of the DGCX stakeholders and the implementation team. It also reflects the vision of the Government of Dubai in supporting this project from the outset.'

DGCX opened its membership last June and received an overwhelming response that resulted in more than 270 applications being received in less than two months. Of these, some 200 have now been approved in principle by the DGCX Board, and 50 have completed all documentary requirements and been formally admitted to membership.

Confirmed members are: Mashreq Securities; National Bank of Dubai; Standard Bank; Goldas (Turkey); Supama International; Swiss Gold; Shaheen Brokerage and Al Ghurair Giga as Broker Members and Kaloti; Lakhoo Metals; Bin Sabt and Yusuf Noonoo as Precious Metals Trade Members

'We estimate that we will have around 100 members trading on the DGCX markets on day one. This critical mass of members will ensure that the first day of trading will be meaningful, and will see active participation from across the globe. These numbers will increase within a very short period of time,' says Mr. Pochara.

A series of important tasks have been successfully completed to allow the DGCX to reach launch in such a short space of time, as well as a membership drive and member training.

These tasks included: the formalisation of exchange rules and regulations; setting up a technology infrastructure provided by Financial Technologies; the recruitment, training and induction of DGCX team; the finalising of business rules relating to trading, clearing and settlement procedures; and the recruitment of clearing banks, refiners, vaults and testers.

Gold futures first

To begin with, members will be able to trade in six forward months for gold futures, and trading of silver futures and gold and silver options will be available during first quarter of 2006. Following which a diversified range of commodities such as steel, marine fuel oil, freight rates and cotton will be introduced for trading.

It only remains to be seen whether the global commodities boom will continue, ensuring the success of the world's newest commodities exchange. One global commodities guru, Jim Rogers, author of the best-seller 'Hot Commodities' notes that the shortest commodity bull market lasted 14 years and that the current one is only five years old.