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FEATURES<br />
feedback. There is significant potential<br />
to grow our contracts further and<br />
launch new products at the right time<br />
by accessing regional liquidity pools in<br />
Middle East and Asia.”<br />
Hasham says the key benefits for<br />
market participants of trading currency<br />
futures on DGCX is that all<br />
transactions take place and are settled<br />
within the advantageous tax regime and<br />
regulatory environment of the United<br />
Arab Emirates.<br />
Settlement is also guaranteed via the<br />
Dubai Commodities Clearing<br />
Corporation, reducing the counterparty<br />
risk inherent when trades are transacted<br />
bi-laterally over-the-counter. In<br />
addition, he says, trading on-exchange ensures best<br />
price discovery as market makers provide aggregated<br />
liquidity pools rather than offering one price as per<br />
the currency spot markets.<br />
The DGCX trading platform incorporates a<br />
sophisticated and automated risk management system.<br />
Hasham says: “We continually review and upgrade<br />
our technology infrastructure to integrate advanced<br />
features, in order to meet the growing needs of<br />
members and market participants. Recently, we<br />
50 | january 2010 e-FOREX<br />
offered an onsite co-location service to support our<br />
market markers and liquidity providers.”<br />
Hasham believes that high levels of volatility in<br />
exchange rates coupled with the need to manage<br />
counterparty risk have strengthened the value<br />
proposition of FX futures trading and encouraged<br />
participants to transact on a regulated exchange such<br />
as DGCX, as an essential means for hedging price<br />
risk. DGCX currency futures also offer many<br />
arbitrage trading opportunities with other<br />
international markets.<br />
He says: “As forex is seen as an<br />
attractive alternative asset class<br />
and with an estimated daily<br />
turnover of $2.5 trillion, it is<br />
seeing interest from all<br />
participants, institutions and<br />
retail investors. This trend is also<br />
underlined in the Middle East by<br />
significant growth in the volume<br />
of DGCX currency contracts in<br />
2009.”<br />
So long as the futures exchanges<br />
continue to innovate and create<br />
FX products, it seems very likely<br />
that they will benefit from the<br />
current regulatory pressure and<br />
the recent flight to quality<br />
amongst the banks.
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