India Launches First Ever Diamond Futures Exchange

Finance and Trade
01/09/2017 15:22

The Indian Commodity Exchange (ICEX), a screen-based online derivatives exchange for commodities, went live on August 28. ICEX commenced operations with the launch of Diamond Futures, which will be the world’s first futures exchange in diamonds. It is intended to help Indian polishing companies better hedge price risks. The diamond contracts launched by ICEX initially is in size of 1 carat with compulsory delivery. “Indian manufacturers most require this type of financial product,” said managing director and CEO Sanjit Prasad. “ICEX shall offer a fair, transparent and nationwide market, bringing in large market participation into diamond trade. It shall result in efficient price discovery and provide an effective hedging platform for all stakeholders of the diamond industry." He adds, "This will create an entirely new market for the diamond industry players where the sellers can deliver their certified quality diamonds to different set of buyers from across the country." Currently the exchange numbers more than 100 members and around 4,000 clients have registered with the exchange.

Prasad told Bloomberg that the exchange, backed by companies including Reliance Capital Ltd. and MMTC Ltd., will start trading in 1 carat/100 cent contracts and will eventually add 50 cent and 30 cent contracts. The futures exchange, two-and-a-half years in the making, followed talks with the Ministry of Finance and the Securities and Exchange Board of India. ICEX notes that sellers will need to get the diamond certified by the De Beers-promoted International Institute of Diamond Grading and Research and will get credit in electronic form equivalent to the carat deposited. The exchange has 20 large diamond companies including Rosy Blue (India) Pvt. Ltd. and Kiran Gems Pvt. Ltd. as members and expects about 45 sightholders of De Beers to transact on the exchange platform, Prasad said.