Singapore-based securities firm and investment bank UOB Kay Hian (the stockbroking arm of United Overseas Bank Ltd) has joined the Singapore Diamond Investment Exchange (SDiX), the world's first and only commodity exchange trading in physically settled diamonds, as its pioneer broker, writes The Business Times. This means UOB Kay Hian will be able to offer its accredited investors the chance to invest in diamonds as an asset class. Its affiliates in Hong Kong, Thailand, Malaysia and Indonesia will have the same access. The announcement marks progress in the development of the exchange, which was launched in July last year to provide a transparency price discovery mechanism for the diamond trade. Investors will be able to trade either single large stones or baskets of small investment-grade diamonds which are fungible, meaning they will be identical in cut, clarity and colour and hence mutually interchangeable. All stones traded on SDiX will be graded by the Gemological Institute of America, and investors who buy single stones will be able to examine the certifications through the platform.
UOB Kay Hian senior executive director Esmond Choo said that the partnership creates opportunities for the brokerage's clients to participate in the polished diamond market, which is worth US$22 billion a year. "For the first time, diamonds can be traded with the security and efficiency expected of any financial asset using the SDiX platform," he said. "We look forward to supporting the development of this marketplace." SDiX chairman and founder Alain Vandenborre said: "Partnerships with leading institutions such as these underline the rapidly growing demand among investors and investment managers globally for new opportunities in diamond-backed investments."