Indian Commodity Exchange Set to Start Trading Diamond Futures
January 05, 17(IDEX Online) – India is about to become the first country to traded polished diamonds on a commodity exchange.
The Indian Commodity Exchange Ltd (ICEX) is putting the final stages into place for the launch of diamond contracts to enable anyone to trade in diamonds, according to Indian media reports.
Final approval from the Securities and Exchange Board of India (SEBI) is due soon with a formal launch set for March. The exchange already has in-principle approval for the launch of the contracts.
Sanjit Prasad, managing director and chief executive officer of ICEX told The Hindu, “There are around 80 diamond site-owners [sightholders] globally and we have got 20 of those on our exchange.
“Our mock trading saw participation from around 100 people. Once diamond contracts start trading on an exchange, it will become a financial investment product. Diamonds have never been able to become an investment product due to low transparency in pricing,” he added.
Since there is no global benchmark price for diamonds, as there are for gold or silver, it has failed to become an investment option.
“Out of every 13 diamonds [in the world], 12 are either cut or polished in India," said Prasad. "So we should set the benchmark price as well. We basically import prices of all the commodities that are currently traded in India. It is time we exported a benchmark price as well."
Diamonds are one of six products that the government last September approved for trading on an exchange platform. In addition to diamonds, the government also approved tea, eggs, cocoa, pig iron and brass.