UAE. The Dubai Commodities Clearing Corporation (DCCC) has become the first central counterparty (CCP) in the Middle East to join Euroclear’s global Collateral Highway.
The DCCC guarantees settlement for all trades executed on the Dubai Gold & Commodities Exchange (DGCX), which is supported by a system of initial and variation margins.
Scheduled for full operation in early 2014, this exclusive agreement with Euroclear will enable clients of DCCC and DGCX to use CCP-eligible securities held in Euroclear Bank - and in all other entities connected to the Collateral Highway - as collateral to fulfil initial and variation margin requirements at DCCC.
Tim Howell, Chief Executive Officer of Euroclear, said: “Extending our global Collateral Highway to the Middle East is another milestone in our plans to improve cross-border collateral mobility. It also underscores our commitment to clients and market infrastructures in the MENA region to ease cross-border flows and contribute to its appeal as one of the world’s high-growth regions. We are therefore pleased to be able to welcome the Dubai Commodities Clearing Corporation as the first CCP in the Middle East to join the Collateral Highway.”
Gary Anderson, Chief Executive Officer of the Dubai Gold & Commodities Exchange (DGCX), commented “DCCC’s collaboration with Euroclear’s global Collateral Highway - the leading global market infrastructure to mobilise collateral across borders - will enhance distribution capabilities, help mitigate risks, lower costs and create greater efficiencies for the DGCX member community. We look forward to leveraging the strengths of both institutions to meet the collateral needs of DGCX market participants.”
Gaurang Desai, Chief Operating Officer of the Dubai Commodities Clearing Corporation (DCCC), added: “At DCCC, it has been a constant endeavour to deepen our offerings and services to all our clearing members. As demand for collateral continues to grow, the partnership with Euroclear’s global Collateral Highway is particularly timely and important. By joining forces, we alleviate one of the challenges of collateral fragmentation by facilitating the seamless transfer of collateral to the right place at the right time. By offering increased flexibility and cost efficiencies, we hope to become the CCP of choice in the Middle East and North African region.”
The Dubai Gold & Commodities Exchange (DGCX), established in 2005 as the region’s first commodity derivatives exchange, has become the leading derivatives exchange in the Middle East. DGCX is majority owned by Dubai Multi Commodities Centre (DMCC), a strategic initiative of the Government of Dubai, with a mandate to enhance commodity trade flows through the Emirate by providing the appropriate physical, market, financial infrastructure and services required.
DGCX’s range of futures contracts offers participants of the physical commodities markets, such as producers, manufacturers and end users, a sophisticated means of hedging their price-risk exposure. In addition, DGCX offers trading opportunities to financial communities and investment houses in the Middle East and around the globe that wish to access the growing asset class of commodity and currency derivatives.
The Dubai Commodities Clearing Corporation (DCCC) was established by the DGCX as a wholly owned subsidiary to undertake all clearing, settlement and risk management functions. DCCC is the central counterparty for all trades executed on the DGCX trading platform, whereby it acts as a seller to all buyers and buyer to all sellers on the Exchange.
DCCC provides a settlement guarantee for all trades executed on DGCX via a Settlement Guarantee Fund, which is supported by a system of initial and variation margins, and daily mark-to-market procedures.
Euroclear is the world’s largest provider of domestic and cross-border settlement and related services for bond, equity, derivatives and fund transactions. The Euroclear group includes Euroclear Bank, based in Brussels, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The Euroclear group settled the equivalent of EUR 542 trillion in securities transactions in 2012, representing 159 million domestic and cross-border transactions, and held more than EUR 23 trillion in assets for clients.
Euroclear’s global ‘Collateral Highway’ is the first fully open global market infrastructure to source and mobilise collateral across borders. Launched in July 2012, the Collateral Highway is now transporting nearly EUR 800 billion of securities as collateral everyday to a wide range of collateral takers.
The Collateral Highway links commercial and investment banks, supranationals, central banks, central counterparties and other capital market infrastructure providers across time zones and markets.