Membership opens for Dubai's gold exchange

Dubai Gold and Commodities Exchange (DGCX), the first electronic multi-commodity derivatives exchange in the East Asia, today announced that it was open for membership.

DGCX, a joint venture between the government of Dubai and India's Multi Commodity Exchange (MCX), hopes to eclipse the Tokyo Commodities Exchange (TOCOM) as the world's number two gold exchange within three years, said David Rutledge, chairman, DGCX, and acting chief executive officer of Dubai Metals and Commodities Centre (DMCC).

"The underlying bullion market in the Middle East is significantly bigger than in Japan. "Realistically, a period of two to three years" would probably be needed to overtake TOCOM, he added. New York's COMEX is the leading gold derivatives market.

DGCX will commence operations in November this year with trading in gold futures contract followed by silver. This will be followed by options trading in gold and silver in early 2006 and trading in other commodities such as steel, fuel oil and freight rates will follow.

Rutledge said, "The opening of the membership is a milestone not only for DGCX, but also for the entire regional market."

Jignesh Shah, vice chairman, DGCX stated, "DGCX would initially restrict its membership in broker and trader categories to 250 each. To boost the market confidence, the exchange will attract participation from leading commodities and securities players and make it the most preferred exchange regionally and internationally."

Outlining the membership structure, Framroze Pochara, chief executive, DGCX, said, "DGCX will have two membership catagories. The first category is broker members who will be able to trade on all market segments of DGCX such as precious metals, energy and agricultural commodities either as principal or on behalf of clients. The second category will be trade members who can trade only on the respective trade segment for which membership has been applied and as principal only. In the first tranche of membership offered, the admission fees for broker membership is $100,000 and trade membership is $20,000 per segment."

DGCX also announced that the exchange's initial clearing banks would be HSBC and National Bank of Dubai.

The new generation, online trading system of DGCX will enable producers, traders and investors to transact business in a transparent environment without any counterpart risk, since all transactions executed on the Exchange will be guaranteed.

DGCX will trade 7 days a week with trading hours extending from 10.00am to 11.00pm.

This will overlap with the trading hours in US, Europe and the Far East. Members will be able to connect to the DGCX trading system from anywhere in the world.

The orders placed by members on the exchange will be routed to a central order book with automatic order matching algorithm.