Strategic partnership will unveil new opportunities for Indian diamond traders to hedge their business risk
The Singapore Diamond Investment Exchange (“SDiX”), the world’s first and only commodity exchange trading in physically settled diamonds, and the Multi Commodity Exchange of India Ltd. (“MCX”), the No.1 commodity derivatives exchange in India with an overall 90% market share and near 100% in bullion, today announced that they have signed a Memorandum of Understanding (MoU) forging a strategic alliance to launch spot and derivatives contracts on diamonds in India, including using the SDiX-traded reference prices.
The goal of this strategic alliance between SDiX and MCX is to develop, design and launch, with the relevant regulatory approvals, the first diamond derivatives contract of its kind anywhere in the world. The contracts will utilise actual traded spot prices for the daily and final settlement of diamond contracts. The MoU serves as the foundation for both exchanges to collaborate in the areas of product and market development, investor education and knowledge sharing in this domain, and to promote the further growth of the diamond market by leveraging the respective strengths of each platform.
India is the largest global hub for the cutting and polishing of diamonds. There is an opportunity to establish a market in financial and commodity derivatives based on diamonds, and this partnership offers diamond market participants a unique tool to hedge their business risk and unveils new opportunities to unlock diamonds as an investible commodity. SDiX and MCX are together well placed to offer domestic Indian diamond traders, jewellers and financial market participants access to Indian Rupee denominated derivatives products based on physically settled diamonds.
Alain Vandenborre, Executive Chairman & Founder of SDiX, commented: “India is the largest polished diamond centre in the world, and so tools to hedge business risk give an attractive incentive to trade on the platform in this market. SDiX is committed to working with MCX to offer this unique opportunity for jewellers and diamond traders, commodity market participants, and intermediaries to trade in diamonds in a transparent and regulated market. This development reinforces the role of SDiX as the sole provider of a true global pricing benchmark for investment grade diamonds”.
Mrugank Pranjape, CEO of Multi Commodity Exchange, added: “We are pleased to have signed this MoU with SDiX. The MoU will support the mutual interests of MCX and SDiX towards establishing price discovery, enhancing transparency in prices and help the value-chain with a risk management platform, in a commodity like Diamond in which India has a significant global presence. MCX already has the patronage of the Bullion & Jewellery value-chain in India. Through this association, both the exchanges, as well as the market stakeholders they serve, will be able to capitalize on the synergies, leverage knowledge and expertise to support innovations and development in diamond trading”.
SDiX launched in May 2016, and was established to provide the only transparent price discovery mechanism for the global diamond trade, giving financial markets and investors a benchmark price to value diamonds as an asset class, and to unlock new investment opportunities for global investors. The Exchange is supported by a fully integrated ecosystem, including a depository that enables the physical settlement of diamonds, and a global network of partners focused on grading, vaulting, settlement and logistics.
SDiX is backed by leading global investors including Vertex Venture Holdings, one of the longest operating venture capital firms in Asia and a wholly-owned subsidiary of Temasek Holdings, a Singapore Government investment arm.