Dubai Commodities Exchange Near Opening

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

16 May 2005

The Dubai Gold and Commodities Exchange (DGCX) announced last week that it would be regulated by the UAE Securities and Commodities Authority (ESCA) which is the regulatory body for the stock exchanges in the UAE Dubai Financial Market (DFM) and Abu Dhabi Securities Market.

DGCX is expected to open its doors for trading in December this year, but will invite applications for membership within a month, said David Rutledge, chief executive officer of the Dubai Metals and Commodities Centre (DMCC), one of the sponsors of the exchange.

Rutledge said that DGCX will float a fully owned subsidiary to carry out the settlement of trades on the exchange. "It will function as the buyer for sellers and seller for buyers on the exchange," Rutledge said at a seminar organised by the Institute of Chartered Accountants of India (ICAI), Dubai Chapter.

The DMCC was established by the Dubai Government in 2003 to promote trading in commodities, and develop Dubai as a regional hub for commodities trading. DGCX is a joint venture between the Dubai Metals and Commodities Centre (DMCC), a strategic initiative of the emirates government, the Multi Commodity Exchange of India Limited (MCX) and the Financial Technologies India Ltd (FTIL).

Commenting on the developments at the Exchange, Ahmed bin Sulayem, Chief Operating Officer, DMCC, stated: 'The market's enthusiastic reception, which exceeded our projections, proves that Dubai is poised to become a major market player, both regionally and on the international commodities trading map. DGCX will provide an advanced electronic infrastructure and an organized and monitored environment, where contracts in precious metals, energy, steel, freight and cotton can be initiated and executed.'

DGCX will initially list futures contracts in gold, to be followed by gold options, and futures and options on silver. Rutledge said the trading of crude will not be introduced in the initial stage, although bunkering fuel will be traded on DGCX soon after opening.

There will be two types of membership of the DGCX: broker membership and trade membership. While broker members can trade on behalf of others, trade members will only be allowed to trade on their own account.

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