DUBAI - Dubai Metals and Commodities Centre (DMCC) yesterday announced that the Dubai Commodity Receipt (DCR), a new system that will facilitate the secure storage, trading and financing of commodities in Dubai, is fully operational.
DCRs, launched by DMCC last year, are negotiable warehouse receipts that are issued electronically to facilitate the financing of goods and to combat the fraudulent trade of commodities. Reflecting regional requirements, this trade finance tool has been structured for Islamic as well as traditional financing.
DMCC is now accepting members into the system. DCR's founding members, including 12 leading international, regional and local banks, 13 warehouse operators and collateral managers and five commodity inspection companies, have come together to ensure that from the outset, the storage, custodial and financing requirements of commodity trading companies are met.
"Dubai with its established world-class infrastructure is already the primary transshipment and commercial staging point for commodities in the Middle East as well as other international markets. The DCR mechanism will strengthen the security and efficiency of commodity trading and financing in Dubai," said Sultan bin Sulayem, chairman of Ports, Customs and Free Zone Corporation and chairman of DMCC, while announcing the launch of the DCR in Dubai yesterday.
He said Dubai Ports were trying to establish a system similar to this back in 1987, but due to lack of on-line and other facilities at that time the idea was dropped. Also, at that time customs duties were one per cent only, he explained, adding that it would not be as beneficiary as it is now since DMCC offers a free zone status to its clients.
According to Dr David Rutledge, the DCR combines a number of characteristics that make it unique amongst commodity warehouse receipt systems internationally. Being electronic the DCR system involves commodity traders, banks, warehouse operators and collateral managers all as full participants in the system.
It is generic, it is not designed for specific, standardised commodities, but rather can be used by the market for a wide range of diverse products in response to the market's own requirements. So far five trading companies have signed up for the new system, he said, adding that there will be a lot activity in the next couple of weeks.
Rutledge also told this correspondent that DMCC would launch the gold receipt within a few months' time from now. "We have to approve storage facilities for gold receipt and make it more standardised. For gold it is possible to standardise the description of the commodity, with the primary specification being its purity. In case we do not standardise it, then we can always use the existing DCR system," he said.BY JAMILA QADIR
© Khaleej Times 2004
