Complex Made Simple

Dubai Gold and Commodities Exchange to diversify derivatives offering in 2018

2017 was exceptional on many fronts for the region’s largest and most diversified derivatives bourse, Dubai Gold and Commodities Exchange (DGCX).

Throughout 2017, DGCX recorded new trading highs, launched unique and innovative products and product-related initiatives, grew its strategic partnerships, received regulatory recognitions and industry plaudits too.

Balanced blend of achievements

In 2017, the DGCX, with its reputation as an industry innovator launched the first-ever offshore Chinese-linked gold derivative in international markets. The listing of Shanghai Gold Futures (DSGC) on the DGCX platform attracted interest and participation from traders worldwide.

Since it’s listing on March 10th, 2017, the product has seen steady growth in volumes and has traded over 34,518 lots. Further to this, the listing of additional calendar spreads on key products has increased confidence in the marketplace. To cap an eventful year, the Exchange launched an additional 44 blue-chip Indian Single Stock Futures (SSF), bringing the total to 54, further expanding its Equities product portfolio.

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Achieving milestones

On the regulatory front, DGCX achieved two key milestones. The first milestone was when the Dubai Commodities Clearing Corporation (DCCC), a wholly owned subsidiary of DGCX, received recognition as a Third-Country CCP (TC-CCP) by the European Securities and Markets Authority (ESMA).

This regulatory upgrade opened-up access to European banks to clear DGCX trades without incurring any additional capital requirements as imposed by EU Regulations on their exposure to the DCCC. This was closely followed by both DGCX and DCCC obtaining approval from the Financial Services Regulatory Authority (FSRA), the regulatory authority for the Abu Dhabi Global Market (ADGM), to operate as a remote Exchange and Clearing House.

This recognition enabled ADGM domiciled companies to access DGCX’s trading and clearing platforms. While both these initiatives highlight the strength and diversity of DGCX’s capabilities, it also reiterates the Exchange’s deeper involvement in developing the regional commodity and derivative markets.

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Enhancing risk management

In addition, DGCX also enhanced its risk management capabilities and grew its strategic partnerships, as the Exchange focused its efforts on reinforcing its presence in the MENA region. Development in this area was marked with Abu Dhabi Securities Exchange (ADX) and DGCX signing an MOU to collaborate on creating a unified national clearing house in the UAE. While also signing agreements with both RAKBANK and the Ayedh Bin Dejem Group of Saudi Arabia to cooperate on two Gold related products.

Taking into account the progression and several achievements over the year, DGCX was awarded ‘Exchange of the Year’ by the Futures Options World (FOW) at the Global Investor MENA Awards 2017.

Gaurang Desai, CEO of DGCX, said: “From our achievements in 2017, it is clear we have made progress on all fronts. I believe 2017 was truly a noteworthy year in the history of DGCX, it was more like a coming-of-age experience for the DGCX. Last year, we not only evolved as an Exchange but continued to push the envelope with our efforts and innovation-led approach, which resulted in us achieving our goals as well as setting new ones.”

“Our strategy for 2018 is to keep progressing, moving forward with our goals while continuing to hold innovation at the core of what we do. Similar to last year, our focus will remain on expanding our asset class verticals, growing our member base, increasing our partnerships, strengthening our capabilities, and paving the way for more accolades and regulatory recognition,” added Gaurang.

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New products in the pipeline

In 2017, the Exchange announced plans for its first foray into the Islamic Finance sector with the launch of a Sharia Spot Gold contract.

“We have already earmarked a launch date for our imminent Sharia Gold product, which will be announced in due course. The launch of the Sharia gold product is of utmost significance to us because a product of this kind is uncommon in the derivatives industry and we want to make sure that we do it right, and all efforts have been put in place to ensure that outcome,” said Gaurang.