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; Gaurang Desai, Chief Executive Officer
Products Futures and options in gold, silver, steel, fuel oil and currencies
Website www.dgcx.ae

The Dubai Gold and Commodities Exchange (DGCX) 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, initially offering futures on gold, and expanded to include contracts on silver, fuel oil, steel and four currency pairs, and options on gold futures and the only exchange offering clearing and settlement in the Gulf region.

DGCX is a subsidiary of the Dubai Multi Commodities Centre (DMCC), the government of Dubai.

The exchange has a fee structure in which all participants, whether commercial or non-commercial, pay the same margin.

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.[1]

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.[2]

The exchange was ranked 36th among global derivatives exchanges with volume of 19.6 million contracts, up 35 percent from 14.5 million contracts traded in 2015, according to the FIA Annual Volume Survey.[3]

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.

The DGCX launched its first contract, a gold futures contract, in November 2005[4] and has added derivatives on silver, fuel oil, WTI and Brent Crude Oil, steel and four currency pairs. It has plans to add contracts based on plastics on February 5, 2009.

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.[5]

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 by Gaurang Desai, as acting CEO. [6]

Desai, was named CEO in 2015, He was one of the founding team members that created the exchange.[7]

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.

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, away from currencies and commodities.[8]

Future product plans include 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 this has been delayed until February 2009.[9] Executives have also held talks with the Bursa Malaysia about a partnership in palm oil futures, with contracts in freight rates, cotton and pulses also under consideration.[10]

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.[11]

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 will be the first Indian index futures introduced to the Middle East and North Africa (MENA) region.[12]

On November 19, DGCX announced it would launch its new plastics futures contract on February 28, 2014. The new DGCX Polypropylene plastic futures contract will be the first ever plastics contract to be listed in the MENA region. [13] The contract size will be 5 metric tons (MT), and the contract price will be quoted in US dollars per MT. It will be physically delivered in order to ensure price convergence between the futures market and the physical market.

In December 2013 Futures & Options World named DGCX the "Exchange of the Year 2013" in the Middle East and Africa and recognized its EOS trader platform as the "Best Technology Innovation by an Exchange" in Asia, Australasia, Middle East and Africa.[14]

On February 26, 2014, DGCX and Dalian Commodity Exchange (DCE) announced the simultaneous launch of polypropylene futures contracts at the Middle East Plastics Seminar in Dubai. [15]

On January 15, 2016, DGCX launched its first batch of single stock futures. [16] The exchange also plans on tripling the number of single stock futures contracts they offer by the end of 2016. [17]

In October of 2016 it was announced that the exchange would become the first foreign market platform to use the Shanghai Gold Exchange's new yuan-based gold fix to develop derivative products, starting with a shanghai gold futures contract. [18]

Precious Metals:

  • Gold Futures
  • Options on Gold Futures
  • Silver Futures

Currencies:

  • Indian Rupee - US Dollar FX Futures Contract
  • Options on Indian Rupee Futures
  • Mini Indian Rupee futures
  • Euro - US Dollar FX Futures Contract
  • Sterling - US Dollar Futures Contract
  • Japanese Yen - US Dollar FX Futures Contract
  • Australian Dollar - US Dollar FX Futures Contract
  • Canadian Dollar - US Dollar FX Futures Contract
  • Swiss Franc - US Dollar FX Futures Contract

Energy:

  • Fuel Oil Futures
  • Crude Oil Futures

Steel:

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.[19]

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.[20]

Key People


Contract Volume

Year Total Annual Volume* Percent Change
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 [21]

External Links

References

  1. DGCX’s New Trading Platform Goes Live. Cinnober and DGCX press release.
  2. FIA Annual Survey. FIA.
  3. FIA Annual Volume Survey. FIA.
  4. Dubai Logs in to Gold Futures. Access My Library/The Economic Times.
  5. FT group firm completes exit from DGCX. LiveMint.
  6. Dubai exchange hires second CEO in six months. Financial News.
  7. Indian-origin businessman Gaurang Desai appointed CEO of DGCX. Financial News.
  8. Dubai to launch India futures contract. The Financial Times.
  9. DGCX announces further details of plastics futures contracts. Maktoob Business.
  10. Dubai exchange plans partnership with Bursa. The Star.
  11. DGCX launches Mini Indian Rupee Futures. Emirates247.
  12. Dubai exchange to list Sensex Futures for trading on July 5. The Economic Times of India.
  13. DGCX to list region's first plastics futures contract. Trade Arabia.
  14. DGCX Named Exchange of the Year 2013. DGCX.
  15. DGCX and China's Dalian Commodity Exchange Launch Plastics Futures Simultaneously. Zawya (press release).
  16. DGCX single stock futures contract part of plan to grow product range. The National.
  17. DGCX to treble single stock futures this year. Futures & Options World.
  18. Shanghai signs Dubai as 1st foreign exchange to use its gold fix for futures products. Reuters.
  19. Regulations Governing The Trading of Commodities on Licensed Markets. Dubai Gold & Commodities Exchange.
  20. DGCX Expands Ties With Chinese Market With China Futures Association MOU. Mondovisione.
  21. Independent Software Vendors. Dubai Gold and Commodities Exchange.