World-first diamond exchange set for Singapore

The world’s first exchange for physical diamonds, is set to launch in Singapore in the fourth quarter, with a longer-term plan of creating a diamond futures market.

Alain Vandenborre, the man behind the Singapore Diamond Investment Exchange (SDiX), thinks they can be bought and sold in a different way.

He said he is surprised no one has tried to bring the trading of diamonds as a commodity into the 21st century on a global scale.

To achieve that vision, some of the biggest diamond companies in the world have been secured as suppliers, including New York-based Leo Schachter, a leading manufacturer.

“Up until now, the industry has been old-school. There’s wholesalers, there’s retailers, people in the middle, and there’s just no room for those people anymore. This way, we as manufacturers can go directly marketplace to sell our goods at the right price,” said CEO Alex Yarrow.

According to SDiX, it expects to see turnover of at least US$250 million in its first full-year of trading, with operational bases set-up in Singapore, Hong Kong and India. And there are bolder plans for the future.

“We’re going to start as the spot-market, but that’s not my strategy. The strategy is to move towards a futures licence,” said Mr Vandenborre.

“The Exchange will be as soon as we’re regulated under the Futures Trading Act and will be launching a number of derivative products, which are highly needed. The diamond industry needs to hedge its position.”

The new exchange might be what the marketplace needs.

According to the widely-followed Rapaport Diamond index, the August price of a one-carat stone was 13 per cent lower than a year ago. Still, at the Hong Kong and Jewellery and Gem Fair, some traders remain upbeat despite economic wobbles in China.

“When they slowdown, it’s going to cause a lot of pressure, so the volatility has increased considerably, I think it’s stabilising now as we speak so I believe players will come back in because the market has dropped quite a bit,” said Mayank Mehta, CEO of Rosy Blue.

The trading of polished diamonds is quiet and expectations from dealers at the Hong Kong and Jewellery and Gem Fair was muted. Retail inventory levels remain high, particularly among 0.30-carat to 0.40-carat goods, as jewellers are not stocking up on inventory because of a retail slowdown in China.