With Indian rupee is yet to be fully convertable coupled with the fact that the establishment cost of trading in western world is skyrocketing - making Dubai all the more attractive.
According to sources close to the development, many existing commodity brokers from Kolkata, Delhi and Mumbai like Ashiqa Commodities, Nainwala Commodities and BNK Commodities have already taken memberships from Dubai Gold & Commodity Exchange (DGCS). And other traders like Proficient Commodities and Masscomm Traders are also considering the same. The Indian currency is not fully convertible has become a major hurdle for Indian commodity future traders to take membership for trading in DGCS. In India, commodity futures are traded in rupee denomination and not in dollar. On the other hand, trading in DGCS is in dollar denomination which is much more acceptable currency, a Kolkata-based trader said.
Commodity futures markets in Europe and the US, has a very high establishment cost. The New York Metal Exchange (Nymex), for example, in which memberships are granted after a bidding process, establishment cost is approximately $3.8 million and slots are also few. In DGCS, the same will cost around $300000. Dubai -- located between Far East and Europe -- thus falling under a time zone suitable for business originating from both east and western world. In addition, the desert city is becoming a global market place. A rough estimate suggests that people from more than 100 countries are currently residing in Dubai.
DGCS, a joint venture between the Dubai Metals & Commodities Centre, Financial Technologies (India) Ltd and Multi-Commodity Exchange of India Ltd had started its operations in November 2005.