Dubai Gold and Commodities Exchange

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Dubai Gold and Commodities Exchange
DGCX logo.jpg
Founded 2005
Headquarters Dubai, UAE
Key People Ahmed Bin Sulayem, Chairman
Products Futures and options in gold, silver, steel, fuel oil and currencies
Website www.dgcx.ae

The Dubai Gold and Commodities Exchange (DGCX), wholly-owned by the Dubai Multi Commodities Centre (DMCC), the government of Dubai, was launched in November of 2005 as part of the Gulf emirate’s efforts to establish a global financial services hub. The electronic platform was branded as the first commodities exchange in the Middle East and today offers futures on gold, silver, copper, zinc, currencies, crude oil, equity indices and single stock futures on 59 global stocks.[1]

DGCX's trading platform, the EOS Trader Platform, went live on March 12, 2013, marking the completion of the exchange's new technology infrastructure built by Cinnober.[2]

DGCX and its CCP Operator arm, Dubai Commodities Clearing Corporation (DCCC) were granted the status of a ‘Recognised Body’ by the Dubai Financial Services Authority (DFSA), the regulatory authority for the Dubai International Financial Centre (DIFC), in June 2015, enabling DIFC companies to access the exchange's products.[3]

The exchange was ranked 33rd among global derivatives exchanges in 2018 with volume of 22.2 million contracts, up 27 percent from s year earlier, according to the FIA Annual Volume Survey.[4][5]

History

The DGCX is one of four financial exchanges in the Gulf emirate, and one of two targeting the commodities sector, alongside the rival Dubai Mercantile Exchange. Launched in 2005, it was the first commodities exchange in the Gulf Coast region.

The DGCX launched its first contract, a gold futures contract, in November 2005 and has added derivatives on silver, fuel oil, WTI and Brent Crude Oil, steel and four currency pairs.[6]

The exchange has over 200 members and is regulated by the Emirates Securities and Commodities Authority. Clearing is provided by the wholly-owned subsidiary Dubai Commodities Clearing Corporation.

The exchange was originally a 50/50 joint venture with Financial Technologies before the DMCC acquired an additional 1 percent from its Indian partners for $12.5 million in early 2007. Financial Technologies slowly lowered its ownership stake in the exchange and in 2016, sold off its remaining stake of 14.4 percent for $5.77 million, exiting the partnership.[7]

DGCX was named "EMEA Exchange of the Year" at the FOW Global Investor Awards held in London in December of 2018.[8]

Exchange Leadership

Framroze Pochara, a former vice-president of the National Stock Exchange of India, was recruited as CEO in mid-2005, but stepped down in mid-2007 to be replaced by Colin Griffith. In November 2011, Stephen Gaterell took the role of CEO at DGCX, until April 2012 when Gary Anderson replaced him. Anderson stepped down for health reasons in October 2014, and was succeeded in 2015 by Gaurang Desai, one of the founding team members that created the exchange. He stepped down in February 2018 and was replaced by Les Male. [9] [10][11]

Product Development

DGCX offers a range of contracts covering precious metals, energy, metals and currencies. The launch of a gold futures contract in December 2005 was followed in March 2006 by a silver future, with three currency pairs – the dollar against sterling, euro and the yen – followed in October 2006 by a fuel oil future, the latest of many efforts to establish a Middle East crude oil futures benchmark. In May 2007, the exchange launched futures on WTI and Brent crude oil.

Contract volumes in the currency complex surpassed the bullion business for the first time on Apr. 19, 2007 and a fourth currency pair – billed as the first exchange-traded dollar/rupee contract – was launched in June 2007. Exchange volumes passed 200,000 contracts for the first time in the quarter to June 2006 and climbed to 256,094 – with a near-tripling in notional value to $9.02 billion in the June quarter of 2007.

Its first steel future was launched in October 2007 but was later delisted.

In March of 2013, DGCX signed a licence with MSCI to launch futures on the MSCI India index, which represents about 85 per cent of the market. The futures contract marks the exchange's first step into equities along.[12]

DGCX's product plans included a suite of four plastics futures for delivery at points in the Middle East and Southeast Asia. The plastics contracts were slated to launch in mid-2007, but were delayed for several years. DGCX later partnered with Dalian Commodity Exchange to launch polypropylene futures on both exchanges on February 28, 2014 with an aim to create a new price benchmark for plastics in the Middle East/North Africa region. A mini plastics futures contract was launched in 2016.[13][14][15][16]

On April 22, 2013, DGCX announced the launch of a Mini Indian Rupee Futures Contract (DINRM). The mini contract is one-tenth the size of the existing DGCX Indian Rupee futures contract.[17]

On July 3, 2013 the DGCX launched a futures contract based on the Sensex Index, the benchmark index of the Bombay Stock Exchange (BSE). The DGCX Sensex Futures was be the first Indian index futures introduced to the Middle East and North Africa (MENA) region. In 2018, the Indian government pushed India's exchanges to stop licensing its stock indexes to foreign exchanges such as DGCX and the Singapore Exchange. The Bombay Stock Exchange, owner of the Sensex index, terminated its agreement with DGCX, aimed at preventing Indian investments from leaving the country.[18][19]

On January 15, 2016, DGCX launched its first batch of single stock futures. In November 2017, DGCX added 44 blue chip Indian companies to its single stock futures offerings and as of 2019 DGCX listed 59 India and US single stock futures contracts.[20][21]

In 2017 the exchange became the first foreign market platform to use the benchmark price from the Shanghai Gold Exchange to develop derivatives products, beginning with the DGCX Shanghai Gold Futures contract.[22]

Precious and Base Metals Futures:

  • Gold
  • Indian Gold
  • Shanghai Gold
  • Shari’ah Compliant Spot Gold
  • Silver Futures
  • Indian Silver
  • Copper
  • Zinc

Currency futures:

  • Indian Rupee - US Dollar
  • Indian Rupee Options
  • Mini Indian Rupee- US Dollar
  • Indian Rupee Quanto
  • Euro - US Dollar
  • Sterling - US Dollar
  • Japanese Yen - US Dollar
  • Australian Dollar - US Dollar
  • Canadian Dollar - US Dollar
  • Swiss Franc - US Dollar
  • South African Rand - US Dollar
  • Russian Ruble - US Dollar

Energy Futures:

Equity Futures:

  • MSCI India Index (INR)
  • MSCI India Index (USD)
  • Indian Single Stock Futures
  • US Single Stock Futures

Regulatory

The DGCX is regulated by the Emirates Securities and Commodities Authority (ESCA). Established in 2000, ESCA is the supervisory and executive public authority overseeing DGCX.[23]

ESCA is a member of the International Organisation of Securities Commissions (IOSCO) and is also the regulatory authority for the Dubai Financial Market and the Abu Dhabi Securities Market.

In May 2015 DGCX further expanded its relationship with the Chinese derivatives market by signing of a Memorandum of Understanding with the China Futures Association (CFA), a non-profit self-regulatory industry body headquartered in Beijing. The agreement seeks to enhance ties between the derivatives markets of China and the UAE.[24]

Key People

Contract Volume

Year Total Annual Volume* Percent Change
2018 22,260,136 27.6%
2017 17,439,658 (-11.3%)
2016 19,669,786 35.6%
2015 14,505,316 23%
2014 11,789,063 (-)14.3%
2013 13,759,255 43.6%
2012 9,601,553 201.5%
2011 3,184,979 --

Approved ISVs [25]

External Links

References

  1. The Leading Derivatives Exchange in the Middle East. DGCX.
  2. DGCX’s New Trading Platform Goes Live. Cinnober and DGCX press release.
  3. FIA Annual Survey. FIA.
  4. FIA Annual Volume Survey. FIA.
  5. 2018 Annual Volume Survey. Futures Industry.org.
  6. Dubai Logs in to Gold Futures. Access My Library/The Economic Times.
  7. FT group firm completes exit from DGCX. LiveMint.
  8. DGCX Wins ‘EMEA Exchange of the Year’ at the FOW Global Investor Awards 2018. DGCX.
  9. Gaurang Desai is stepping down as CEO of the DGCX. DGCX.
  10. Dubai exchange hires second CEO in six months. Financial News.
  11. Indian-origin businessman Gaurang Desai appointed CEO of DGCX. Financial News.
  12. Dubai to launch India futures contract. The Financial Times.
  13. DGCX announces further details of plastics futures contracts. Maktoob Business.
  14. DGCX and China's Dalian Commodity Exchange Launch Plastics Futures Simultaneously. DGCX Press Release.
  15. DGCX to list region's first plastics futures contract. Trade Arabia.
  16. DGCX and China's Dalian Commodity Exchange Launch Plastics Futures Simultaneously. Zawya (press release).
  17. DGCX launches Mini Indian Rupee Futures. Emirates247.
  18. Dubai exchange to list Sensex Futures for trading on July 5. The Economic Times of India.
  19. Dubai exchange explores options as Indians stop licensing securities abroad. Reuters.
  20. DGCX single stock futures contract part of plan to grow product range. The National.
  21. DGCX to treble single stock futures this year. Futures & Options World.
  22. Shanghai signs Dubai as 1st foreign exchange to use its gold fix for futures products. Reuters.
  23. Regulations Governing The Trading of Commodities on Licensed Markets. Dubai Gold & Commodities Exchange.
  24. DGCX Expands Ties With Chinese Market With China Futures Association MOU. Mondovisione.
  25. Independent Software Vendors. Dubai Gold and Commodities Exchange.