Dubai Gold and Commodities Exchange launches DGCX Shanghai Gold Futures
The contract opens up access to the world’s largest bullion market which was restricted for foreign participation up until now.
The Dubai Gold and Commodities Exchange (DGCX) has announced the historic launch of DGCX Shanghai Gold Futures (DSGC), following the signing of a landmark deal with the Shanghai Gold Exchange (SGE) last year. The yuan-denominated contract, DSGC, marks the first-ever usage of the Shanghai Gold Benchmark Price in international markets. The launch of the DSGC was officially announced at the Dubai Precious Metals Conference (DPMC).
Commenting on the launch, Ahmed Bin Sulayem, Chairman of the DGCX and Executive Chairman of DMCC, said, "The listing of the Shanghai Gold Futures contract on DGCX is a landmark development. With the launch of this contract, all key bullion price indicators are accessible on a single platform, with significant margin efficiencies. We are delighted to further this partnership with the Shanghai Gold Exchange, today the largest bullion market in the world."
The introduction of DSGC opens up a vital trading link by providing investors across the globe access to the largest bullion market, which is connected to over 10 million institutional customers, 8.3 million individual customers and 55 certified gold vaults.
DSGC will have a far-reaching appeal to those seeking access to a product with deeper liquidity pools and a fair and transparent pricing mechanism. The DSGC contract is quoted and traded in Yuan, with settlement prices derived from the Shanghai Gold Exchange (licensee). The contract is size 1,000 grammes (1kg) with the contract price quoted in CNH per gramme.
The listing of Shanghai Gold Futures on DGCX which has a wide international footprint and well-established local clearing capabilities for precious metals in the Middle East, bodes well for the UAE, particularly Dubai, which is already a strategic gold trading hub and a key point in the ‘Belt and Road’ initiative.
DGCX’s bullion product suite currently includes a Spot Gold Contract, Futures contracts in both Gold and Silver as well as Indian Quanto contracts in Gold and Silver. The addition of the DSGC contract will greatly enhance DGCX’s precious metals offering and more specifically complement the Exchange’s gold products. It also raises DGCX’s global appeal – making it the only Exchange in the world to offer a range of gold products that are linked to all the major global trading hubs including China, India, Dubai and the US.
Speaking on the launch of DSGC, Gaurang Desai, CEO of DGCX, said, “This is a significant milestone for DGCX and we are truly delighted to be the first and only Exchange in the world to introduce a Chinese gold-backed derivative product in international markets. By trading DSGC, members and participants of the DGCX can access the Chinese bullion market which until now was difficult to access for foreign participants. The product will also open doors for other traders who do not currently trade on DGCX but are keen to access the Chinese bullion market.”
Alfred Yeung, Chairman of GlorySky Group, also commented on the launch of Shanghai Gold Futures on DGCX, “The DGCX Shanghai Gold Futures is an innovative gold product resulting from DGCX‘s fruitful collaboration with the Shanghai Gold Exchange. This product is of immense significance to our customer base across Asia Pacific, who have been seeking access to the Chinese Bullion market for a while now. Also, having a large Chinese bank like the Agricultural Bank of China as an appointed market maker gives us the assurance that liquidity is guaranteed at all times. I’m confident that this unique gold product would greatly appeal to our clients who’d like to trade and take positions to hedge against fluctuations in gold prices.”
“Introducing innovative products such as the DSGC to the market highlights the valuable role that DGCX plays in developing the regional derivatives marketplace. And now with the launch of DSGC, we are further deepening our presence and commitment in the global bullion market. We are confident that DSGC will attract more traders worldwide to participate on the DGCX platform,” added Gaurang.
DGCX has institutionalised robust market-making mechanism to ensure liquidity and competitive price spreads throughout the trading day. Amongst others, Agricultural Bank of China (DIFC Branch) has been officially appointed as the market maker for the contract to support momentum and maintain liquidity in the marketplace.