GCC investors reap the benefit of new Shari’ah compliant silver spot contract
Platform was launched by DGCX
The GCC region’s inaugural Shari’ah Compliant Silver Spot Contract (DSSC) is providing investors with a secure and transparent platform for trading the precious white metal.
Dubai Gold & Commodities Exchange (DGCX), the top derivatives exchange in the Middle East, launched the contract in late 2023, after securing regulatory approval from the UAE Securities and Commodities Authority (SCA).
The DSSC contract went live on October 27, 2023.
Investors in the GCC region now have unprecedented access to physical silver through an exchange, thanks to the DSSC.
The introduction of a central counterparty clearing house by DGCX aims to mitigate credit risk, providing investors with increased confidence in their silver trading activities. Moreover, DGCX’s platform allows investors to take substantial positions in silver without encountering limit restrictions.
Amidst a backdrop of rising inflation, the demand for silver is on the ascent. In 2022, all major silver demand categories achieved record highs, with total offtake growing by an impressive 18% to 1.242 billion ounces (Boz), according to The Silver Institute.
Growth potential
S&P Global Ratings further anticipates a 10% growth in the global Islamic finance sector in 2023-2024, reinforcing the potential for Shari’ah-compliant securities like DSSC.
Ahmed Bin Sulayem, Executive Chair and CEO of DMCC, noted: “The world will see accelerating demand for silver as the precious metal is increasingly used in industries like solar energy and investors maintain their focus on asset diversification.”
Bin Sulayem believes that DSSC will garner significant interest from traders and investors alike, building on the success of their Shari’ah Compliant Gold Spot Contract launched in 2018.
Certified by prominent Shari’ah scholars, each DSSC contract represents a 999.9 purity 900-ounce silver bar of ‘UAE Good Delivery’ specification. The delivery process is streamlined through DMCC Tradeflow, an online platform ensuring the seamless registration of possession and ownership of commodities stored in UAE-based facilities.
DGCX anticipates robust interest in the Shari’ah Compliant Silver Spot Contract from various market participants, including managers of exchange-traded funds (ETFs), banks, non-banking financial institutions, and commodities traders. The contract expands DGCX’s existing portfolio of precious metals contracts, encompassing Shari’ah-compliant gold spot, silver, and gold futures.
DGCX is the Middle East’s largest digital marketplace, providing traders with the tools to manage risk, protect value, and grow portfolios. DGCX fosters market liquidity by offering a diverse range of futures and options contracts covering base and precious metals, hydrocarbons, equities, and currencies.
Featured image: Investors in the GCC region now have unprecedented access to physical silver through an exchange. Image: Pixaby
Last Updated on 10 months by News Desk 1
