In 2005, the Dubai Multi Commodities Center entered into a joint venture initiative with an Indian company named Financial Technologies Ltd. and the Multi Commodity Exchange of India Ltd. (MCX) to create the Dubai Gold and Commodities Exchange (DGCX). It was established as a major commodity and currency derivatives exchange in the Middle East, with electronic trading accessible from anywhere in the world. The exchange has adopted the Dubai Gold Receipt’s (DGR) system for effecting the physical settlements of gold and silver against futures contract position. We decided to take a close and exclusive look on this important venture in the test of time, and did it in our Q1 2013 Industry Report, combining our unique research tools with an interview with Gary Anderson, CEO of DGCX since April 2012.
A notable reason for Dubai’s successful gold industry is the free trade environment, which makes this Emirate one of the cheapest places in the world to buy gold jewelry. The new exchange started offering a sophisticated means of hedging price risk exposures for producers, manufacturers and end-users alike, which had been unavailable in the Middle East until then. In addition, DGCX offered trading opportunities to financial communities and investment houses in both the Middle East and further afield who wish to access the commodity and currency derivative asset class.
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It is our opinion that the derivatives market in the Middle East has considerable scope for growth. Hence, it is entirely feasible that sizable sections of the trading community in the region can raise their business profitability and better manage risk from market volatility by using derivatives products as investment and hedging tools. Moreover, the DGCX Academy was launched last year with the objective of raising awareness and understanding of the benefits of derivatives trading to a wider audience in this fascinating region.
In the full article, you’ll get an in-depth look on this important exchange’s trading volumes, strategies, perspectives and forecasts.