Dubai bourse keen on alliances among Asian exchanges

DUBAI: Dubai Gold &Commodities Exchange (DGCX), Middle East’s largest derivative exchange, said it would work towards greater cooperation and alliances among Asian exchanges in order 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 while speaking at the Dubai Precious Metals Conference on Tuesday.

He said DGCX’s 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 have a unified clearing house,” he further added.

Further discussions centred on the nature of change that global futures markets have undertaken and continue to undertake. Topics such as electronic trading, price discovery, visibility, growth and the evolution of the Spot-to-Futures markets came up for debate.

The other participants at the conference, representing Chicago Mercantile Exchange (CME), London Metal Exchange (LME) and Boursa Instanbul presented their views on the role of their respective exchanges on the markets going forward, in a panel discussion.

There was also 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 (LME), said there has been extreme pressure on the LME due to regulatory changes.

“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,” he said.

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?

There were strong views that all regional markets can have 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,” the LME official said.

Over the last twenty years trading exchanges have become increasingly reliant on electronic trading as trading floors have been closed enabling greater anonymity while trading.

The tightening of regulatory oversight as well as the introduction of low latency solutions have helped drive volumes and increase price discovery amongst international and regional exchanges.

Yang Lu, Director, Metals Products, CME, based in London, said that the electronic trading provides convenience and price discovery wherever one is.

“We are definitely not losing out, but rather riding on the momentum of trade moving from West to East. We are already this year seeing further strong growth and this is coming from Asian clients and Europe, Middle East & Africa (EMEA) countries,” Yang Lu said.

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