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DGCX launches first Shari’ah-compliant GCC silver spot contract

He Dubai Gold and 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”), which aims to provide investors a reliable and transparent platform for marketing the white metal.

Having received UAE regulatory approval Securities and Commodities Authority (“SCA”), the new contract will be available for negotiation from October 27, 2023. DGCX will also waive its fees for the DSSC contract until December 31, 2023.

With the launch of 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 clearinghouse, mitigating credit risk. By trading through DGCX, investors will also be able to take large positions in silver without limits.

In a context of high inflation, demand for silver continues to grow. According to The Silver Institute, all major silver demand categories reached record levels in 2022, with total extraction growing 18% to 1,242 million ounces (Boz). Additionally, S&P Global Ratings expects the global Islamic finance sector to grow by 10% in 2023-2024, further supporting demand for Shari’ah-compliant securities such as DSSC.

Ahmed Bin Sulayem, Executive Chairman and CEO of DMCC, saying:

“The world will see increasing demand for silver as the precious metal is increasingly used in industries such as solar energy and investors maintain their focus on asset diversification.

This, combined with the growing 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 conversations with the market and the success of our Shari’ah compliant gold spot contract launched in 2018, we expect to see significant interest in DSSC from both traders and investors looking to access silver in a safe and reliable. “We look forward to working closely with our members to continue bringing innovative contracts to the market in the coming months and years.”

The underlying asset of each DSSC contract, which has been certified by leading Shari’ah scholars, is a 900 ounce bar of 999.9 purity silver. “Good delivery in the United Arab Emirates“specification. Contract delivery is seamless through DMCC Tradeflow, a flexible and customized online platform for recording possession and ownership of products stored in UAE-based facilities, ensuring a seamless process from start to finish.

DGCX expects there to be significant interest in its Shari’ah-compliant spot silver contract from a variety of market participants, including exchange-traded fund (“ETF”) managers, banks and non-bank financial institutions, as well as commodity traders.

DSSC It adds to DGCX’s existing portfolio of precious metals contracts, which includes Shari’ah-compliant spot gold, as well as silver and gold futures.

News source: Dubai Press Office

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