DUBAI - The Dubai Gold and Commodities Exchange (DGCX) today announced the launch of the GCC's first Shari'ah Compliant Silver Spot Contract (DSSC), aimed at providing investors with a reliant and transparent platform for trading the white metal.
Having received regulatory approval from the UAE Securities and Commodities Authority (SCA), the new contract will be available for trading from 27th October 2023. DGCX will also waive its DSSC contract fees until 31st December 2023.
With the launch of DSSC, investors will, for the first time, be able to invest in physical silver through an exchange in the GCC with the benefit of a central counterparty clearing house, mitigating credit risk. By trading through DGCX, investors can also take large positions in silver with no limit restrictions.
Against high inflation, the demand for silver continues to grow. According to The Silver Institute, all major silver demand categories achieved record highs in 2022, with total offtake growing by 18% to 1.242 billion ounces (Boz).
Furthermore, S&P Global Ratings expects the global Islamic finance sector to grow by 10% in 2023-2024, which will further support demand for Shari'ah compliant securities such as DSSC.
Ahmed bin Sulayem, Executive Chairman and Chief Executive Officer of DMCC, said, "The world will see accelerating demand for silver as the precious metal is increasingly used in industries like solar energy and investors maintain their focus on asset diversification. This, combined with the increasing maturity of the global Islamic finance industry, has created the ideal environment for DGCX to launch the region's first Shari'ah Compliant Silver Spot Contract.
"Based on our discussions with the market and the success of our Shari'ah Compliant Gold Spot Contract launched in 2018, we expect to see significant interest in DSSC from both traders and investors looking to access silver securely and reliably. We look forward to working closely with our members to continue bringing innovative contracts to the market in the months and years ahead."
The underlying asset of each DSSC contract, which has been Certified by prominent Shari'ah scholars, is a 999.9 purity 900-ounce silver bar of "UAE Good Delivery" specification. Delivery of the contract is made seamlessly through DMCC Tradeflow, a flexible and customised online platform to register possession and ownership of commodities stored in UAE-based facilities, ensuring a seamless end-to-end process.