At a time when global mining majors De Beers, Rio Tinto and BHP Billiton have trimmed their rough diamond supplies because of the global economic slowdown and huge inventory pile-up of finished jewellery, India’s jewellery makers may procure finished round diamond through the world’s first cash electronic trading platform launched recently in Antwerp, Belgium.
The Dealers’ Organisation for Diamond Automated Quotes (Dodaq) has launched www.exchange.dodaq.com, the world’s first online diamond exchange, in Belgium’s Antwerp, the diamond capital of the world.
The exchange offers a two-way auction of round polished diamond between 0.30 and 1.49 carats for individual categories, thus creating real-time spot prices and the first cash market for diamond.
The two-way auction mechanism provides price transparency to eliminate the mystery of diamond pricing and allows the market to decide a fair value as in case of stocks, currencies and other commodities.
The development assumes significance as over 50 per cent of manufactured diamonds are round, and of that over 70 per cent are between 0.30 and 2 carats. At present, India procures rough diamond to the tune of $6,904.40 million (April–December 2008).
In an e-mail response to a Business Standard query, Dodaq Chief Operating Officer (COO) Benjamin Spivack said that the exchange accepts only certified diamonds from members of the World Federation of Diamond Bourses (WFDB), the Antwerp-based global federation of diamond miners, processors and traders, to be issued onto the exchange.
Without divulging names of the global diamond companies, Spivack said, “Many leading names are associated with us.”
A privately-owned company, Dodaq is a cash market with a central holding facility in Geneva, Switzerland.
Assuring of smooth trade on the exchange, Spivack said, “There will be no delivery defaults as all diamonds published on the exchange must first be in the vault to ensure its existence… All payments are instantaneously settled. This is achieved as participants have to pre-fund their accounts to be able to bid for a diamond.”
Currently, there is no membership fee and Dodaq being a cash market, there are no margin calls on the exchange.
All client funds are held by ABN AMRO Bank and Dodaq uniquely offers instantaneous settlement, steering the industry away from the current reliance on credit.
Dodaq Chief Executive Officer (CEO) Simon Okuniew said, “For us to guarantee settlement, we need to be satisfied that the diamond is real and this is achieved through certification. The system calls for the original certificate, which is then matched with the diamond. They are then sealed so that at no stage they can be handled. The diamond is then sent to our specialist vault in Geneva, which is run by our professional custodian Malca-Amit, one of the most respected security and storage operators in the world with a 21-year proven track record.”
