DGCX Launches Copper Futures

• New contracts will go live on April, 20, 2012
• The first ever copper contract in the MENA region
• Establishment of DGCX Copper Advisory Group
 
Further expanding its diverse suite of derivatives products, the Dubai Commodities Exchange (DGCX) today announced the launch of Copper Futures. The region's first ever copper contracts will go live on April 20, 2012, and will be cleared by the Dubai Commodities Clearing Corporation.
 
Over 600,000 tonnes of copper is consumed annually in the Middle East and with significant construction and infrastructure projects in the pipeline; the demand for copper will continue to grow across the region. The introduction of this new futures contract is the result of both these favorable market conditions and a high demand from market participants.
 
DGCX has also established a Copper Advisory Group, an informal body composed of copper market players that provides the Exchange advice on the design of the Copper Futures Contract; and facilitate vital market feedback. The Group, which includes leading companies in the copper-consuming industry like DUCAB and Lucky Group, in addition to DGCX Members, helps DGCX ensure that it maintains a constant feedback loop with the copper market
 
The DGCX Copper Futures contract - one of the most liquid metal contracts in the world, will provide both retail and institutional investors with the optimal mechanism to hedge their risks against price fluctuations in copper. The contract will additionally offer attractive arbitrage opportunities to market participants engaged in taking advantage of the price differential between exchanges.
 
Ahmed Bin Sulayem, Chairman of DGCX said: "Under the regulatory guidance of the Securities and Commodities Authority (SCA), DGCX has contributed significantly towards the diversification of the region's financial services by providing viable risk management and investment tools. The DGCX Copper Futures contract further adds to the opportunities available for investors in the region in diversifying their portfolios away from traditional assets such as equity and real estate as futures products allow for financial gains when markets move in either direction. In addition, trading in Copper Futures contracts will also allow international investors to benefit from the increasing liquidity pool of the Middle East."
 
Samir Shah, Chief Business Officer of DGCX said: "Fluctuating demand from across the world, and its sensitivity to today's uncertain economic growth prospects, has increased price volatility in copper. DGCX has been working closely with both its Members and market participants to fully understand their requirements to manage price risk in base metals. By offering excellent arbitrage opportunities, competitive margins and transaction costs, combined with the clear benefits of transacting and clearing business from within the UAE, our Copper Futures contracts will be an attractive value proposition for both retail and institutional investors."
 
The DGCX Copper futures contracts will trade from 8:30AM to 11:30PM Hours Dubai Time or 10:00AM to 1:00PM India Time or 12:30PM to 3:30AM Singapore Time. The contact is sized at
5 metric tonne (MT), with the contract price quoted in US dollars per MT. The contract is cash settled against the New York futures settlement price for copper to maximize its financial use. The 5 MT contract size was a result of consolidated feedback from the physical hedgers, investors, and cross-exchange participants. The size of the contract and pricing mechanism is expected to boosts its arbitrage trading potential.
 
DGCX has institutionalized robust market-making mechanisms to ensure high liquidity and competitive price spreads are provided through each trading day. Another unique advantage is that the Exchange offers clearance of all trades through the Dubai Commodity Clearing Corporation (DCCC), removing counterparty credit risk and providing guaranteed settlement to each transaction contract. Local clearance also ensures investor funds do not leave the region, including for clearing and settlement.
 
DGCX presently offers trading in wide range of energy products, precious metal and base metals and currencies, making available all key economic indicators on one single Exchange in the Middle East. Since its launch in 2005, the exchange has traded over 11.97 million contracts with a value in excess of US $550 billion.