Dubai, March 27, 2006 (WAM) - The Dubai Gold and Commodities Exchange(DGCX) today announced a landmark development where the exchange confirmedthat Emirates Securities and Commodities Authority (ESCA) has approvedits application for launching currency futures trading. Initially DGCXwill trade futures contracts in 3 currencies - Euro-Dollar, Yen-Dollarand Sterling-Dollar with contracts maturing in March, June, Septemberand December each year. These will be deliverable contracts. This willestablish DGCX as the first exchange for trading currencies in the MiddleEast, according to a statement from DGCX.
DGCX shortly will be announcing the detailed contracts specificationsand procedures for the existing or new members to participate in thesemarkets. This will include a category of membership to be known as FOREXTrade Membership for those entities who wish to trade on DGCX currenciesmarkets as principal. National Bank of Dubai and HSBC have agreed to actas Delivery Banks for the purpose of settlement of DGCX currencies futurescontracts.
This development positions DGCX among the handful of exchanges globallythat offer trading on commodities and currencies under one umbrella. Theannouncement comes on the day when DGCX is launching futures trading inSilver. These initiatives showcase the pace of development at DGCX andthe vision of its management.
Average daily international foreign exchange trading volume was $1.9trillion in April 2004, according to the Bank of International Settlements(BIS) study. Also as per Futures Industry Association figures, total volumesin exchange-traded foreign currency derivatives rose by over 57% from55.34 million in 2004 to 165.51 million contracts in 2005.
Currency derivatives products are very useful for all those who engagein international commodity trade for hedging the risk arising out of currencymovements. In fact most corporates having transnational operations usecurrency derivatives to hedge against adverse movements in exchange rates.
Currency derivatives also form a large part of treasury operations forbanks, hedge funds and investment houses.Dr. David Rutledge, Director DGCX and CEO of DMCC said, "I am very happyto announce that trading in currency futures will commence on the DGCXplatform very soon. This is a big leap forward for our young exchangewhich has been in business for just 4 months.. Dubai is fast emergingas a financial hub in the Middle East, with many of the Fortune 500 companieshaving a presence here. The region has a huge potential for currenciestrading.
At DGCX, we believe that a diversified range of products should be availablefor trading. Currencies will add to the existing product basket of preciousmetals along with contracts on steel, agricultural and energy productswhich will be traded on DGCX in the near future." Ahmed Bin Sulayem, Directorof DGCX said "It is very important to have a healthy commodities and currencyderivatives markets for any region to achieve a global recognition asan attractive financial hub. DGCX gained that recognition for Dubai whenit went live with Gold futures last November and DGCX is doing it againwith the introduction of currency futures.
We are highly thankful to the UAE regulatory authorities for taking upour proposal positively and granting us the necessary permissions in avery short time. The introduction of DGCX currency futures contracts willusher in a new era of financial futures trading in the Middle East bringingmore maturity and agility to these markets..Counting on its key strength of a very adaptable technology platform,DGCX said that it expects to start trading currency futures within thenext two to three months.
Currency futures contracts will be traded on DGCX's fully electronictrading platform, giving currency traders the ability to immediately respondto events in global markets. This pioneering initiative is expected togenerate interest among corporate treasuries, importers and exporters,professional and inter-bank proprietary traders, and retail participantsin the region, who were traditionally confined to banks and other largefinancial institutions for their foreign exchange market requirements.
DGCX's new currency futures product will be an opportunity for privateinvestors and an important risk management tool for foreign currency marketparticipants in the region.
