The Dubai Commodity Receipt (DCR), the new commodity trading, warehousing, finance and management system being launched by the Dubai Metals and Commodities Centre (DMCC), will go online on June 1 this year, according to DMCC chief executive Tawfique Abdullah.
"The DCR will be launched on June 1 this year, for the commodities traders to log on for membership. It will be an online platform, more than a marketplace, which will enable traders to source and trade in commodities," he said.
"The DCR will be open to everyone. However, only its members would be able to use it. Traders will be able to apply for membership and we will run throught the application and the applicant's background.
"Once approved, the applicant will become a member of the online trading community within the DCR."
The Dubai Commodity Receipt will be linked to the Ports, Customs and Free Zone Corporation's (PCFC) online portal, DubaiTrade.ae, which is an integrated online platform of the Dubai Ports Authority, Dubai Customs and the Jebel Ali Free Zone.
The Dubai Commodity Receipt, which will change the way commodities are traded in Dubai, is an electronic confirmation that commodities known to be stored in a warehouse are exactly of the type and quality as specified on the DCR.
Abdullah said the Dubai Commodity Receipt will take commodities trade to a different level and fine tune the processes.
"Among other things, it will be a meeting point for buyers and sellers, and it could be used as a finance tool by traders," he said. "It will be more efficent and transparent."
According to market sources, the massive investment in Dubai's ports infrastructure has resulted in a quantum growth in the value and volume of commodities traded here.
According to the DMCC, over Dh20 billion worth of cargo passes through Dubai's three ports every year.
Containerised bulk movements through Port Rashid, Jebel Ali Port and Port of Hamriyah have been growing at about 20 per cent annually over the past few years.
A DMCC official said, Dubai's financial infrastructure has challenges arising from this phenomenal growth.
"For example, whilst the vast proportion of commodity transactions internationally are financed using specialist documentary banking procedures and financial structures, there are no established mechanisms to enable international and local bankers financing goods in and out of Dubai to ensure the funds they are advancing, are properly secured against goods held to their order," Tawfique Abdullah said.
"For that matter, even where traders don't need to borrow, there is no system for them to be sure that the warehouse they have chosen in Dubai is reliable. It is a risky business - will the warehouse go bankrupt, or will the trader sell the goods to a third party and pocket the money?
"These risks pose a real danger to traders and the banks support them. The Dubai Commodity Receipt is all about improving control over collateral and preventing warehouse fraud," Tawfique Abdullah said.
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