World's first diamond trading exchange going live from today

India has a major share in cutting and polishing of diamonds, with 90% of global work

The Singapore Diamond Investment Exchange (SDiX), the world’s first and only commodity exchange trading in physically settled diamonds, is going live from Thursday. This could change the way diamonds are traded.

At present, trading is done after viewing diamonds and usually one on one. Once the exchange picks up, it will be portal-based and with transparent pricing. This could also bring investors into diamonds.

India has a major share in cutting and polishing of diamonds, with 90 per cent of the global work. Several diamond processors and exporters have taken membership of the Singapore exchange. One of them explained, “SDiX offers a platform to trade diamonds electronically on a price/time priority in a continuous market and buyers can place indicative price bids by diamond category. All stones traded on SDiX are Gemological Institute of America (GIA)-graded and buyers of single stones can examine certifications directly through the platform.”

Custodial services are by Malca-Amit, a global wealth management logistics company.

The benefit of graded diamonds makes these reliable and pricing would be transparent. Investors not conversant with the product would find it interesting when it is graded and certified, apart from transparent pricing.

Richcomm Global Services, a Dubai-based international commodity services company and leading independent broker and clearing member of the Dubai Gold and Commodities Exchange, has been approved as a  pioneer member of the SDiX to offer clients the opportunity to invest in diamonds as an asset class.

The exchange’s website said the Singapore Diamond Investment Exchange has been established to provide the only transparent price discovery mechanism for the global diamond trade, giving banks, financial entities and investors a benchmark price. The exchange is supported by a fully integrated system, including a depository that enables physical settlement and a global network of partners focused on grading, vaulting, settlement and logistics.

SDiX is backed by leading global investors, including Vertex Venture Holdings, one of the longest operating venture capital firms in Asia and a wholly-owned subsidiary of Temasek Holdings, Singapore’s sovereign wealth fund.

Last year, Latika Kundu, chief operating officer of SDIX, had told this newspaper: "We conservatively estimate that in the first year (2016), the turnover would be $250 million, which will include basket lots and single diamonds." And, that the target was to double that figure in 2017. "Two years down the line, SDIX plans to launch forward trading and futures trading in diamonds," she had said.

The process will be such that a seller will have to deposit diamonds according to standardised lots, after being graded and certified by the GIA, in dedicated physical vaults — one operated by Malca-Amit in Singapore and the second one operated by Malca-Amit within the Bharat Diamond Bourse at Mumbai. Brokers will have to keep security deposits, based on which their trading limits will be decided. They will also have to collect money from buyers and deposit it with the exchange. Trade will be settled in a T+3 cycle (three business days after the transaction date).