DGS records 7,744 contracts since Nasdaq Dubai listing

Dubai Gold Securities (DGS) saw a total of 7,744 contracts in the first one and a half months since its listing on Nasdaq Dubai by the Middle East's first exchange traded Shariah-compliant fund.

The total value of contracts traded so far stands at $712,018, (Dh2.6 million), according to Nasdaq Dubai.

"We are satisfied with the response we have had so far. I believe that exchange traded funds (ETFs) are still a new instrument to Dubai and to the region.

"The DGS is among the best performing derivatives at Nasdaq Dubai," said a senior official at Dubai Commodity and Asset Management (DCAM), the company marketing the product.

The official said volumes are expected to increase as the Dubai Multi Commodities Centre (DMCC), a partner in the launch of DGS, begins an aggressive marketing campaign soon.

"The DMCC plans to have a marketing team in place soon to market. We see the product trading well considering the gold backed hedge funds have shown a significant rise in volumes," the official said.

David Rutledge, CEO of Dubai Multi Commodities Centre (DMCC), had recently told Emirates Business that arbitrage deals between different gold products have been driving the DGS trade.

"The demand for gold in the Middle East has increased tremendously in the past four months. We are expecting all gold backed derivatives to do well," said Anoop PS, general manager, JRG Capital Benefits, a DGCX registered broker.

The DGS can be bought and sold on Nasdaq Dubai in the same way as shares are traded, through one of the exchange's 29 regional and international trading members, or through a broker that has a relationship with a Nasdaq Dubai trading member.

DGS is an initiative of the World Gold Council (WGC) and the DMCC. Similar gold securities have been listed through WGC initiatives on 12 other international exchanges, with gold in trust exceeding 1,200 tonnes.

The DGS are the only securities listed in the Middle East to have been declared Shariah-compliant by a Shariah Supervisory Board.

The DGS offer investors Shariah-compliant access to gold bullion investment without the additional costs normally associated with insuring, storing and transacting in physical gold.

Each security is fully backed by physical allocated gold held in safekeeping by an independent custodian.

Each unit represents an initial interest of one-tenth of a fine troy ounce of allocated gold bullion.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.