The Singapore Diamond Investment Exchange (SDiX) has announced the launch of the world’s first commodity exchange for physically settled diamonds, aiming to standardise global trading in diamonds as an asset class.
The move represents the most significant change in global diamond trading practices for centuries. Diamonds have until now been largely traded manually and bilaterally in marketplace-style bourses but as an antiquated trading system, buyers have no transparency on the trading process or access to pricing information and have therefore not been able to properly engage in the market.
How the SDiX Platform Works
The platform has been designed to enable accredited investors to trade diamonds as an asset class for the first time by providing an independent, electronic, and regulation-ready global market that creates a transparent price discovery mechanism for diamonds. As a result, banks, financial firms and investors will for the first time have a benchmark price to value diamonds as an asset.
SDiX is built on a fully integrated, regulation-ready ecosystem which includes an industry-leading electronic trading platform, a depository that enables the physical settlement of diamonds and a global network of service providers that support the exchange and its members with grading, vaulting and settlement.
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The bourse will initially aim to support spot trading and as this matures it will offer more sophisticated products such as ETFs and derivatives that will further enhance the benefits of the platform for global investors.
SDiX is backed by leading global investors including Vertex Venture Holdings, a wholly-owned subsidiary of Temasek Holdings, Singapore’s sovereign wealth fund. Other early investors include Jim Rogers, chairman of Rogers Holdings, and Hsieh Fu Hua, chairman of United Overseas Bank Ltd., a former head of Singapore Exchange Ltd. and a former president of Temasek.
Commenting on the launch of SDiX, Executive Chairman and founder Alain Vandenborre said: “The SDiX represents a tectonic shift in how diamonds are traded. By providing the first ever transparent and open price discovery mechanism for diamonds, the exchange unlocks a major opportunity for investors to trade diamonds as an asset class.”
Vandenborre went on to explain that volatility may be expected in the coming days as it is the first time that a commodity exchange has opened for diamonds. He expects the price to stabilise in a few weeks time after which a benchmark price will be reached.
The SDiX is entirely independent of the diamond industry and fully regulation-ready, so that investors, suppliers and other industry players can benefit from a transparent and unbiased marketplace. Trading hours will be from 2:30 p.m. to 6:30 p.m., with broker members in Singapore, Hong Kong, London and Dubai.