Sunday 20, August 2017 by Jessica Combes

DGCX to launch region’s first Shari'ah-compliant spot gold contract


The Dubai Gold & Commodities Exchange (DGCX) and Ayedh Dejem Group have agreed to develop and launch the Middle East’s first-ever Shari'ah-compliant spot gold contract to be traded on an international exchange.

The partnership enables both entities to increase their presence in the Saudi Arabian and wider GCC Islamic Finance market, and attract the interest of regional Islamic financial institutions and banks.

This development is reflective of the growing potential of the Saudi Arabian and wider GCC regions Shari'ah-compliant gold markets. According to the World Gold Council, Saudi Arabia’s gold demand, stood between 60 and 85 tonnes. This is the highest in the Middle East and ranked sixth in the world; representing almost 30 per cent of demand across the region. Shari'ah compliant gold investments are worth an estimated $2 trillion meaning the decision to launch this new contract is ideally timed.

“We are looking at this product to develop local markets and unlock the potential of Gold trading in the region. We continually look to work with partners that allow us to capitalise on these opportunities. We are delighted to collaborate with the Ayedh Dejem Group as we believe the new Spot Gold contract will encourage new and existing institutional participants to invest and trade in Shari'ah compliant products. As the largest derivatives bourse in the Middle East, we are confident of the product’s success and establishing more such partnerships and launching additional products in the future,” said Gaurang Desai, Chief Executive Officer of the DGCX.

Ayedh Dejem Group is one of the largest oil transportation and storage platforms in the region, working closely with GCC producers. The group also manages numerous Gold centres and is a key investor in the field of fixed assets, including infrastructure and real estate, while developing new projects in Dubai and the wider UAE.

“We are committed to delivering high quality products and services to our customers, and, in addition, this partnership is further evidence of how we are contributing to the growth of the Islamic Finance market. We believe our partnership with DGCX supports our vision to enhance cross-border collaboration as it offers access to the regional gold and commodities market, providing customers with improved hedging and investment solutions in compliance with Shari'ah law,”said Ayedh Bin Dejem, Chairman for the Group.

Historically, Dubai has been called ‘The City of Gold’ and the Middle East are heavily invested in gold, it is an important asset class within any portfolio and fund managers tend to allocate a portion of their total investments to gold. The launch of this product appealing to a wider range of investors in the region is an ideal way for the Exchange to extend its reach.

“Bringing Shari'ah-compliant products to a wider audience will continue to garner interest from the local populous as well as other global entities that are looking for a route into the newest and fastest growing sector of the mainstream financial markets. Amanie Advisors LLC, the leading global Islamic Finance advisory firm, has been selected to advice on the initiative,” added Desai.  

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