The UAE’s commodities and currency derivatives bourse, Dubai Gold and Commodities Exchange (DGCX), said on Wednesday that Industrial and Commercial Bank of China Limited (ICBC), the world’s largest bank, has joined as a Settlement Bank for Dubai Commodities Clearing Corporation (DCCC) which is a wholly owned subsidiary of DGCX.
The partnership will now enable DGCX members to process their clearing obligations for the trades executed on the exchange with the major Chinese lender, underlining the expansion of the bank’s activities across the region as well as the growing financial relationship between Dubai and China.
With the addition of ICBC, DCCC has expanded its network of settlement banks to six which also includes UAE’s first lender Emirates NBD, Standard Chartered, HSBC, Bank of Baroda from India and Bank of China. ICBC is the second Chinese bank to be appointed as a settlement bank and would be operating through its Abu Dhabi branch.
Mutual products and services going forward
Separately, ICBC celebrated Monday the listing of a $400 million bond on Nasdaq Dubai, the Middle East’s only international exchange by regulation. The listing marks the second bond that ICBC has brought to the Middle East’s financial venue.
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ICBC will be among the few clearing banks of DGCX, the Middle East’s largest derivatives market, for settling the accounts of its members. DGCX/DCCC members and their clients benefit from secured settlements and capital efficiency afforded to them via margin offsets and a wide range of collateral compared to any other CCPs in the region.
It’s said that under the agreement, DCCC members will be allowed to use ICBC’s global post-trade services to access DGCX, which are useful in particular for proprietary trading groups, hedge funds and algorithmic trading firms that want to stay globally competitive with low latency strategies.
DCCC operates as a Central Counter Party (CCP) offering fully integrated clearing and settlement services and collateralisation of exchange traded derivatives. The firm has been the first CCP in the region to tie up with Euroclear and Clearstream to provide efficient collateral management solutions.
Highlighting the significance of the move, Gaurang Desai, CEO of DGCX Group, said: “DGCX is pleased to welcome ICBC as a Settlement Banking partner. This development is not only a significant step forward in expanding settlement services for DGCX market participants but is particularly important in light of the recent agreement to list Shanghai Gold Futures on DGCX (the first yuan-denominated gold futures product to be offered outside of China) and already listed USD-CNH futures. This is just a beginning for our relationship with ICBC and we expect to cooperate in developing mutually products & services going forward.”
Mr. Zhou Xiaodong, General Manager of ICBC Abu Dhabi Branch, added: “We are extremely pleased to associate with DGCX as the Settlement Bank. The association will facilitate adequate CNY liquidity for trading and investment between the local and Chinese economies. This will also lead the way for future product developments. As the largest bank in the world, we are proud to play an integral role in strengthening the development of UAE’s derivatives market.”