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India Opens Diamond-Futures Exchange

Sep 3, 2017 10:53 AM   By Rapaport News
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The Indian Commodity Exchange (ICEX) has launched the world’s first diamond-futures trading contract to help the industry avoid losses when polished prices fluctuate.

Online trading of 1-carat diamonds through ICEX began on August 28, the exchange said last week.

In futures trading, a seller and buyer agree on a price at the beginning of a contract, and a subsequent drop in price during the term of the contract is therefore a loss for the buyer, not the seller. Diamond futures can work as “price insurance,” because price moves can severely impact the value of traders’ inventories, ICEX explained earlier this year when it initially announced the program.

The new platform lets investors buy diamond futures in a format similar to commodities exchanges such as Comex, Nymex and the London Metal Exchange. All the stones traded on ICEX will carry grading reports from De Beers’ International Institute of Diamond Grading & Research (IIDGR).

“ICEX will offer a fair, transparent and nationwide market, bringing large market participation into diamond trade,” said Sanjit Prasad, the exchange’s CEO and managing director. “It will result in efficient price discovery and provide an effective hedging platform for all stakeholders of the diamond industry.”

The Indian government approved diamond-futures trading in September 2016. To date, over 100 members and approximately 4,000 clients have registered with ICEX, the exchange said.

Image: Luibov Luganskaia/Shutterstock
Tags: De Beers, diamond futures, Diamond-futures trading, ICEX, IIDGR, India, Indian Commodity Exchange, International Institute of Diamond Grading & Research, Polished Diamonds, Rapaport News, Sanjit Prasad, trading
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Need for an independant non profit cert agency
Sep 4, 2017 7:48AM    By Praveen Lodha
The ICEX being a exchange listed entity should ensure that the grading reports for the diamonds so listed are from a non profit agency like GIA which has no material and economic interest in the transactions. This is very important for the transperancy and long term confidence building for clients and investors.
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