DGCX receives go-ahead

DUBAI — The Dubai Gold and Commodities Exchange (DGCX) has received the go-ahead from Emirates Securities and Commodities Authority's (ESCA) to launch currency futures trading.

By Babu Das Augustine (Assistant Editor)

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Published: Tue 28 Mar 2006, 9:41 AM

Last updated: Sat 4 Apr 2015, 3:39 PM

Speaking to Khaleej Times, Framroze Pochara, Chief Executive Officer of DGCX said: “There is already a huge spot market for leading international currencies in the UAE and the region. Through the currency futures we intend to offer an efficient and effective hedging mechanism to the Middle East and the surrounding regions.”

Initially DGCX will trade futures contracts in 3 currencies — Euro-Dollar, Yen-Dollar and Sterling-Dollar with contracts maturing in March, June, September and December each year. These will be deliverable contracts. This will establish DGCX as the first exchange for trading currencies in the Middle East.

“This is a big leap forward for our young exchange which has been in business for just 4 months. Dubai is fast emerging as a financial hub in the Middle East, with many of the Fortune 500 companies having a presence here. The region has a huge potential for currencies trading,” said Dr David Rutledge, Director DGCX and CEO of DMCC said in a statement.

DGCX shortly will be announcing the detailed contracts specifications and procedures for the existing or new members to participate in these markets. “The existing broker members can participate in all new contracts being introduced in DGCX. For the trading (only) members, we will introduce a new category of Forex trade membership to trade as principals,” said Pochara.

With the launch of currency futures, DGCX has entered select league of global derivative exchanges that offer currency derivatives. DGCX already has gold and silver futures and expects to add fuel oil and steel futures in the near future.

“It is very important to have a healthy commodities and currency derivatives markets for any region to achieve a global recognition as an attractive financial hub. DGCX gained that recognition for Dubai when it went live with Gold futures last November and DGCX is doing it again with the introduction of currency futures,” Ahmed bin Sulayem, Director of DGCX.

While the currency futures will follow T+1 trading system, National Bank of Dubai and HSBC will act as delivery banks for settlement of DGCX currencies futures contracts. Currency futures contracts will be traded on DGCX's electronic trading platform, giving traders the ability to immediately respond to events in global markets.

“We expect to attract corporate treasuries, importers and exporters, professional and inter-bank traders, and retail participants from the region. Deutche Bank has already shown interest. A number of banks and businesses from the region are expected to trade in currency futures when we start trading,” added Pochara.

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