The Singapore Diamond Investment Exchange (SDiX), announced that trading has started on the world’s first and only commodity exchange for physically settled diamonds. The SDiX platform aims to standardize global trading in diamonds as an asset class and to unlock new investment opportunities for global investors.
The launch of the exchange represents the most significant change in global diamond trading practices in hundreds of years. The platform is designed to enable accredited investors to trade diamonds as an asset class for the first time by providing an independent, electronic, and regulation-ready global market that creates a transparent price discovery mechanism for diamonds. As a result, banks, financial firms and investors will for the first time have a benchmark price to value diamonds as an asset.
Until now, diamond trading has been dominated by manual bilateral trading in physical ‘marketplace’ style bourses. This centuries-old trading system gives buyers no transparency on the trading process and no access to pricing information, meaning that investors have not been able to engage in this market.
The Singapore Diamond Investment Exchange is built on a fully integrated, regulation-ready ecosystem, including an industry-leading electronic trading platform, a depository that enables the physical settlement of diamonds, and a global network of service providers that support the Exchange and its members with grading, vaulting and settlement.
These include some of the leaders in the global diamond trading industry: GIA, the renowned diamond grading institute; leading vaulting and logistics provider Malca-Amit; and Standard Chartered Bank, which will provide banking services and facilitate the cash settlement of transactions. SDiX launches with broker members across Singapore, Hong Kong, London and Dubai.
In the near term, the Exchange aims to support a vibrant spot trading market, and as this matures the Exchange will offer more sophisticated products such as ETFs and derivatives that will further enhance the attractiveness of the platform for global investors. SDiX is backed by leading global investors including Vertex Venture Holdings, one of the longest operating venture capital firms in Asia and a wholly-owned subsidiary of Temasek Holdings, Singapore’s sovereign wealth fund. Early investors include Jim Rogers, Hsieh Fu Hua, Sun Tongyu, and Cai Wensheng.
The SDiX is by design entirely independent of the diamond industry, and fully regulation-ready, so that investors, suppliers and other industry players can benefit from a transparent and unbiased marketplace. With proven exchange technology and a unique settlement infrastructure SDiX provides end-to-end trading for global participants, and price discovery in both immobilized single stones and ‘baskets’, which are fungible collections of investment-grade diamonds.
Both single stones and baskets can be traded electronically on a price/time priority in a continuous market, and buyers can place indicative price bids by diamond category. All stones traded on SDiX are GIA-graded and buyers of single stones can examine certifications directly through the platform. All baskets have an identical number of stones and total weight, and contain stones of identical cut, clarity and colour.
The Exchange is regulation-ready, having been designed to meet the global regulatory standards for commodities exchanges, and uses superior trading technology and a risk management framework that is in line with global best practices for commodity exchanges.