DMCC’S Dubai Precious Metals Conference looks at future of global exchanges

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The DMCC subsidiary, DGCX together with invited guests; CME, LME and Boursa Instanbul discussed their views on the role of their respective exchanges on the markets going forward, in a panel sponsored by the Gold trading powerhouse INTL FC Stone and moderated by Somasandrum PR of the World Gold Council.

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Numerous topics were discussed, with the overall opinion that co-operation within the sector was key. “Our main aim is to extend the work of exchanges to work together throughout Asia. Traders are looking for efficiency so that they can work across many exchanges and a have unified clearing house. We want greater cooperation and alliances to give traders added value. More can be done to achieve this, and we would like to spearhead it,” said Les Male, Chief Executive Officer, DGCX.

Further discussions on the nature of change that global futures markets have undertaken and continue to undertake included such topics as Electronic Trading, Price Discovery, Visibility, Growth and the evolution of the Spot-to-Futures markets.

There was also the acknowledgement from the panelists that regulation has played and will continue to play a large part in the future evolution of exchanges.

Alex Shaw, Head of Market Development – Precious Metals, London Metals Exchange said that there has been extreme pressure on the LME due to regulatory change, which has changed the way of doing business.

“In this new era of a highly regulated gold market and interconnection between markets, we had banks coming to us for being able to provide the trading of spot and futures positions within the existing Infrastructure. Price discovery has become a hot topic. But are they discreet and justify the prices provided by different regional markets or are we so interconnected that the same prices run through to all the exchanges. I believe that all regional markets can all have their own price and justify having their own price. There is a profound change in trading. Price discovery and centres of trading exist for historical reasons. Will they stay relevant? Although we see a big increase in the scale of trading in Asian markets, I see LME still retaining a key role in trading and price discovery. There are more opportunities for the LME to consolidate,” said Shaw.

Over the last 20 years trading exchanges have become increasingly reliant on Electronic Trading as trading floors have been closed enabling greater anonymity when trading, whilst the tightening of regulatory oversight as well as the introduction of low latency solutions has helped to drive volumes and increase price discovery amongst international and regional exchanges.

Another key takeaway was benchmarking. Global benchmarks are often created through access, volume traded and longevity. Further to this as an exchanges position within its own country and wider region adds additional weight to the way markets view benchmarks.

Opening up the Shanghai Gold Exchange and innovation are the main issues that we are promoting. We want to open the Chinese market to the global market in order to increase business and to promote the SGE gold benchmark market. We launched a new contract with the Dubai Gold & Commodities Exchange last year and we are very happy with the success of it. This is an example of the kind of cooperation that we are searching for in finding and working with new partners,” said Jiao Jinpu, Chairman, Shanghai Gold Exchange.

Courtesy : Retail Jeweller India News Service[/vc_column_text][/vc_column][/vc_row]