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Abu Dhabi, UAEMonday 25 June 2018

DGCX sees surge in Euro and Rupee contract trades in August

Derivatives exchange working on Shariah-compliant spot gold contract

DGCX plans to launch a Shariah-compliant gold contract in collaboration with Saudi Arabia's Ayedh Dejem Group. Reuters
DGCX plans to launch a Shariah-compliant gold contract in collaboration with Saudi Arabia's Ayedh Dejem Group. Reuters

The Dubai Gold and Commodities Exchange (DGCX) said that trading volumes in Euro futures rose to their highest monthly level in over four years in August, with Indian single stock futures and Indian rupee options also witnessing a strong increase .

Euro futures trading for August rose 19 per cent year-on-year and 77 per cent compared with July, marking the contract’s highest monthly traded volume since January 2013, the exchange said in a statement yesterday.

The derivative exchange, which operates under the umbrella of the Dubai Multi Commodities Centre, said that its Indian Single Stock Futures, which allow investors to hedge their investment in blue chip Indian stocks, were among the other popular traded products for August.

Volumes of the futures contracts, first introduced by DGCX in January 2016, surged 583 per cent compared with August 2016, the exchange said.

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Indian Rupee Options also saw a surge in volume, witnessing a year-on-year growth of 40 per cent.

“As a multi-asset exchange, we endeavor to provide our market participants with access to a number of products for their investment, hedging and arbitrage needs,” said DGCX’s chief executive Gaurang Desai.

“The increased trading activity in contracts like the Euro and Indian Single Stock futures is an indication that our market participants truly appreciate and are increasingly becoming reliant on wider range of DGCX products.”

Last month DGCX announced plans to launch the Middle East’s first-ever Sharia-compliant spot gold contract to be traded on an international exchange, in collaboration with Saudi conglomerate Ayedh Dejem Group, which manages several gold centres alongside its core oil transportation and storage businesses. No time frame has yet been given for the launch of the contract.

The two entities are hoping to tap growing demand for Shariah-compliant gold across the Middle East, particularly within Saudi Arabia. The World Gold Council estimates that Saudi Arabia’s annual gold demand stands at between 60-85 tonnes, the highest in the Middle East, and the sixth largest around the world. The council estimates that Shariah-compliant gold investments are currently worth US$2 trillion.

DGCX is also planning to create a unified clearing house for several asset classes across the UAE, collaborating with entities including Abu Dhabi’s stock market. In July, DGCX and its parent DMCC were granted regulatory recognition by the capital’s freezone Abu Dhabi Global Market, enabling companies within the free zone to use the trading and clearing facilities of the Dubai-based entities.