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Israel
By Avi Krawitz
As trading slowed over the Passover holiday, the Israel Diamond Exchange (IDE) took advantage of the lull to unveil a number of strategic decisions impacting its members’ operations. The IDE announced an ethical code of conduct, claiming to be the first bourse to initiate such requirements from its members. The code calls for IDE members to conduct their businesses according to the principles of accountability, trust, fairness, integrity, expertise, tradition, industriousness, mutual responsibility and respect for others, the IDE explained. “The introduction of the ethical code of conduct to the Israel diamond industry is an important step in our pursuit of transparency and best business practices,” said Yoram Dvash, president of the IDE. Among the guidelines outlined in the code, members must show respect for clients, colleagues, employees and suppliers and express mutual responsibility to fellow bourse members — including providing aid to those that may be in need. It also calls for members to mentor new businesses entering the market, commit to trust and refrain from “spreading rumors or attacking other members on social media,” IDE stressed. Finally, the document noted that members should comply with all legal regulations and cooperate with authorities to correct any illegal misconduct they encounter.
The code, which was two years in the making, followed the bourse’s decision to appoint a district court judge to rule on large arbitration cases and appeals in order to increase transparency and objectivity in the arbitration process. The move marks a significant break from the bourse’s 80-year tradition of settling disputes within the trade. The bourse is looking for a retired district court judge to fill the role and who will head the IDE’s arbitration institution in lieu of a bourse member. The higher-level arbitration unit will deal with financial disputes valued at $400,000 and above among members, as well as appeals on smaller disagreements. IDE members will continue to deal with initial arbitration between dealers for matters below $400,000. “This is an unprecedented decision that will increase the status of our arbitration institution in Israel and in the diamond world,” Dvash said. “It will contribute to greater transparency and objectivity and will strengthen the independence of the arbitration institution.”
Prior to Passover, Dvash also provided an update on the IDE’s budget, noting that the bourse cut costs by $2.8 million since he took office at the end of 2015. Management targeted its security systems — “without compromising security” — to drive down costs. Measures included using technology-driven alternatives such as automated entrances to the exchange and its parking lots and switching to biometric face recognition. Maintenance costs were also cut by 10 percent, Dvash reported. The savings enabled the bourse to extend its bursary scheme providing a 50 percent subsidy for companies that can’t afford its full membership fee. A total of 400 companies now pay the reduced fee, representing 14 percent of IDE’s approximately 2,800 members. IDE recruited 119 new, mainly younger generation, members during the past year, who Dvash hopes will bring a refreshing component to the trade.
Meanwhile, the enthusiasm that followed the Hong Kong show dissipated somewhat as trading slowed in April. Many companies closed for the seven-day Passover break and the bourse services were available on a reduced schedule. Israeli buyers were looking for goods in India and suppliers were selling in New York and Hong Kong before the Passover break. Dealers noted that buyers were cautious in light of lower inventory requirements from the retail sector. Companies are also cutting costs and becoming more efficient as demand has narrowed and profit margins tightened. Fewer Israeli companies participated in the Baselworld show toward the beginning of the month. Large-stone manufacturers noted demand is slow for better-quality 1-carat to 2.99-carat, D-H, VVS-VS diamonds, while profitability on those goods is tight. The market for more commercial-quality goods remains steady. The focus has been shifting back to the U.S. ahead of the Las Vegas show season. The trade is hoping to reverse the downward trend witnessed in the past three years that saw polished imports to the U.S. from Israel decline 15 percent to $7.08 billion in 2016, according to data published by the U.S. Commerce Department. That meant Israel fell behind India as the largest supplier of polished diamonds to the U.S. for the year.Article from the Rapaport Magazine - May 2017. To subscribe click here.
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