Dubai Gold and Commodities Exchange to launch Sensex futures

Indians living in the Gulf will soon be able to trade the BSE Sensex on the UAE’s Dubai Gold and Commodities Exchange, which became the first exchange in 2007 to launch a successful dollar-rupee futures contract.

DGCX is likely to launch Sensex futures by March this year after completing a technology upgrade, a top exchange official told ET. An agreement licensing the Sensex was signed between BSE and DGCX in the middle of last year.

“The DGCX proposes to launch Sensex futures on its platform within the first quarter of the current year,” said Gaurang Desai, chief operating officer, DGCX.

“The exchange is upgrading its technology infrastructure, by moving over to a trading, clearing and surveillance system provided by Swedish group Cinnober. The technology upgrade is expected to be completed by February-end after which DGCX will launch a range of new products, including the Sensex,” Desai added.

The Sensex futures, added Desai, will be dollar-denominated and targeted at the Indian diaspora in the Gulf, for whom Sensex futures will serve as a hedging instrument. Apart from them, foreign investors who also hold Indian stocks would find trading the Sensex an attractive proposition as Dubai offers ease of trading and an extremely competitive pricing structure. While the NSE’s Nifty futures are traded successfully on Singapore Exchange, the Sensex has been listed on stock markets in Brazil, Russia, Hong Kong and Johannesburg but trading of the index is illiquid.

However, a few market experts like Nirmal Jain, chairman, IIFL, which has an office in Dubai, feel the chances of Sensex having better success in the UAE were relatively higher as Dubai, like Singapore, was a global financial hub consisting of institutional investors. Agreed Alex Mathew, head-research, Geojit BNP Paribas Financial Services, who feels that Sensex’s tryst with Dubai could be more successful than other global markets.