The Dubai Gold and Commodities Exchange (DGCX) is a subsidiary of the Dubai Multi Commodities Centre, a project of the Government of Dubai to promote commodity trade flow in the region. Dubai has historically been a hub for trade in commodities, so DGCX was a natural progression for the Emirate. It was launched in 2005 and has since grown to become the largest and most diversified derivatives exchange in the Middle East.
DGCX offers investment houses and traders around the world access to four primary asset classes: currencies, metals, hydrocarbons, and equities. Participants in the commodity trade value chain, from producers to end users, can take advantage of DGCX’s futures contracts to hedge their exposure to price risk, while international traders and investors can exploit financial opportunities in currency derivatives. Powered by advanced exchange technologies provided by Cinnober, DGCX provides market players with guaranteed settlement, low counterparty risk, a standard fee structure, access to local and global liquidity pools, and robust risk management.
The exchange is open from 7:00 to 23:00 hours Dubai time. Market participants conduct their business within the UAE, and hence benefit from its taxation and regulatory structures.
The DGCX admits members in two categories: broker members and trader members. Broker members may trade the products listed by DGCX on a proprietary basis or for their clients. They must meet the exchange’s minimum net current tangible asset (NCTA) requirements ($250,000 in assets) and comply with its by-laws. NCTA here means the net present value of all the broker’s assets, valued at the lower sum of either cost or market price, minus all liabilities applicable to the assets. Intangible assets like goodwill, future tax benefits, patents, and trademarks are not considered. Neither are non-current assets that cannot be realized within 12 months as going concerns.
Broker members dealing on behalf of clients face additional statutory regulatory hurdles. Foreign broker members have to provide information on the regulations governing them in their home jurisdictions. The admission fee for broker members is $150,000.
Trade members can trade on a proprietary basis only. They must meet a minimum NCTA requirement ($100,000 in assets) and pay an admission fee of $60,000. DGCX approves applicants for membership if they: have adequate financial resources; demonstrate experience and expertise in the commodities, derivatives, or securities markets; or will contribute to the advancement and liquidity of the DGCX market.
To apply for membership, an applicant must complete the application form on the DGCX website and submit it, together with a non-refundable application fee of $1,000, to DGCX. An applicant can also request the application form from the DGCX Membership Department.
All sums paid during the application process must be in the applicant’s name. The exchange’s address and bank details are all available on its website. While the application fee is non-refundable, the membership fee is refundable, at the discretion of the exchange. Only applicants whose applications have been denied can request a refund. Those whose applications have been approved cannot request it.
DGCX continues to pursue its vision of becoming the exchange and clearing house of choice in the GCC region. It works to achieve this through continuous innovation, a dedication to excellence, and collaborations with all partners. For example, it recently partnered with Nasdaq to receive a broad range of marketplace solutions like multi-asset trading, real-time clearing, and pre-trade risk management. The exchange will migrate to the new technology in 2022 and will work with members and other partners to achieve a smooth transition.