More currencies likely on DGCX futures list

The Dubai Gold and Commodities Exchange (DGCX), the first exchange in the region to trade futures in commodities, is planning to add three more foreign currencies to the list of currency futures currently being traded on the exchange.

According to brokers enlisted on DGCX, which currently runs futures trading in euro-dollar, yen-dollar, GBP-dollar and Indian rupee-dollar, the exchange management has finalised plans to seek the regulator's approval for the new move to add currencies such as Australian dollar, Canadian dollar and Swiss franc to the list.

"With the world trade equations keep changing leading to the entry of newer players, one cannot be sure anymore that a particular currency will remain more important than some others. Currencies such as Australian dollar, Canadian dollar and Swiss franc are now seeing more activities than before," said Sajith Kumar PK, Director and CEO, JRG International Brokerage, a leading broker house on DGCX.

DGCX, which commenced operations in November 2005, has a list of commodities up and running and it includes gold, silver, steel, fuel oil, crude oil (WTI) and four currencies.

Though there were plans to launch plastics futures early this year, the same has been put on hold for the time being.

Moreover, trading volume in fuel oil and silver has not met expectations, with fuel oil trading hardly making any mark.

While trading in three foreign currencies – euro, yen and GBP – was launched in 2006, the world's first exchange-traded Indian rupee currency futures was opened for trading on DGCX on June 7, 2007. A guaranteed settlement and reduced counterparty risk is provided by Dubai Commodities Clearing Corporation (DCCC), a 100 per cent subsidiary of DGCX.

DGCX, which is regulated by Securities and Commodities Authority (SCA), has about 250 brokers registered with the exchange, and offers a simple fee structure. There are brokers who still view that investors are yet to take the full advantage of this exchange which offers avenues for investments and hedging.

However, the fast-growing volumes witnessed at the currency futures counters point to the fact that DGCX is tipped to become one of the busiest exchanges for currency futures. Currency futures continued to drive volume on DGCX in August this year, leading to a 44 per cent year-on-year growth in total transactions at 151,699 contracts.

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