The Dubai Gold and Commodities Exchange (DGCX), the region’s largest derivatives bourse, saw brisk trading in the month of March, with volumes aggregating to 1.4 million contracts, valued at $33.5 billion.

The Average Daily Volumes touched 61,471 contracts in March, with a high of 143,312 on March 27.

Perceived global risks ahead of multiple European elections, policy decisions regarding healthcare and environmental bills in the US, and most recently the triggering of  Article 50 and thus the formal start of the Brexit process have led to a jump in trading activity, specifically in DGCX’s G6 currency portfolio.

The Exchange recorded year-on-year growth in Pound Sterling (157 per cent), Japanese Yen (369 per cent), Canadian Dollar (188 per cent) and Swiss Franc (93 per cent).

First quarter (Q1) volumes in Indian Rupee Options saw a significant increase of 68 per cent from the same period last year. The Indian Rupee Options contract also recorded the highest monthly Average Open Interest of30,174 contracts, while Sensex Futures recorded the second highest monthly Average Open Interest of 1,164 contracts in March.

Gaurang Desai, CEO of DGCX, said: “The brisk trading pattern we have witnessed in the past month reiterates that in times of volatility and uncertainty investors flock to regulated and transparent markets like DGCX to hedge against rapid price movements especially in global currency pairs.”

“If you observe the trading trends in the last few months, it is apparent that the European elections, policy decisions in the US and the initiation of formal Brexit negotiations, has created a lot of uncertainty in the minds of investors, which also then impacts equity markets and causes them to underperform. In times like these, derivatives markets play a pivotal role in protecting investors and traders by providing them with opportunities to hedge their risk,” he added.

Regulatory update

The Securities and Commodities Authority (SCA) recently signed a memorandum of understanding (MOU) with the European Securities and Markets Authority (ESMA) aimed at exchanging information on compliance of clearing houses in the UAE that are subject to SCA’s control and supervision, to ensure the technical and legal recognition of clearing firms in the local markets.

This is the second MOU to be signed under ESMA’s umbrella; the first MOU addressed mutual recognition of alternative investment funds individually with each European body.

“We welcome this development. It is significant that SCA is continuing to step-up efforts in ensuring that the region’s clearing and compliance standards are in line with the global industry benchmark,” said Desai.

“This also augurs well for the Dubai Commodities Clearing Corporation(DCCC) which is a leading CCP in the region and an owned subsidiary of DGCX. We believe SCA’s partnership with ESMA will greatly enhance the UAE’s attractiveness and strengthen the country’s position as a regional trading and clearing hub.” – TradeArabia News Service