The Dubai Gold & Commodities Exchange (“DGCX”), the largest and most diversified derivatives exchange in the Middle East, today announced the launch of the GCC’s first Shari’ah-compliant silver spot contract (“DSSC”) to provide investors with a reliable and transparent platform to trade the white metal. Following regulatory approval from the UAE Securities and Commodities Authority (“SCA”), the new contract will be available for trading from 27 October 2023. DGCX will also waive its fees on the DSSC contract until 31 December 2023.
With the launch of the DSSC, investors will for the first time be able to invest in physical silver through an exchange in the GCC with the benefit of a central counterparty clearing house, mitigating credit risk. By trading through the DGCX, investors will also be able to take large positions in silver with no limit restrictions.
Demand for silver continues to grow against a backdrop of high inflation. According to The Silver Institute, all major categories of silver demand reached record highs in 2022, with total offtake up 18% to 1.242 billion ounces (Boz). In addition, S&P Global Ratings expects the global Islamic finance sector to grow by 10% in 2023-2024, which will further support demand for Shari’ah-compliant securities such as DSSC.
Ahmed Bin Sulayem, Executive Chairman and Chief Executive Officer of DMCC, said: “The world will see accelerating demand for silver as the precious metal is increasingly used in industries such as solar energy and investors continue to focus on asset diversification. This, combined with the increasing maturity of the global Islamic finance industry, has created the ideal environment for DGCX to launch the region’s first Shari’ah-compliant silver spot contract. Based on our discussions with the market and the success of our Shari’ah Compliant Gold Spot Contract launched in 2018, we expect to see significant interest in the DSSC from both traders and investors looking to access silver in a safe and reliable manner. We look forward to working closely with our members to continue bringing innovative contracts to market in the coming months and years.”
The underlying asset of each DSSC contract, which has been certified by prominent Shari’ah scholars, is a 900 ounce, 999.9 purity, UAE Good Delivery silver bar. Delivery of the contract will be made seamlessly through DMCC Tradeflow, a flexible and customised online platform for registering title and ownership of commodities stored in UAE-based facilities, ensuring a seamless end-to-end process.
