Markets Work: How Dubai Gold & Commodities Exchange Is Navigating Through Challenging Times

Nasdaq is committed to the resiliency of the ecosystem during this time of unprecedented change in our industry. Our Market Technology community, which includes market infrastructure organizations spanning more than 50 countries, is truly keeping markets up and running. With exchanges laying the foundation for capital formation and job growth, these organizations will continue to play a critical role in the health and recovery of local economies around the world and greater global capital markets ecosystem.

We sat down with Les Male, CEO of Dubai Gold & Commodities Exchange (DGCX), to discuss how his exchange is managing the current environment for their stakeholders, members and employees. 

1. How is COVID-19 affecting your client base? Are you changing how you interact and communicate as a result?

The current situation is truly unprecedented and has forced companies across every industry into unchartered territory.

Understandably, our clients are treading with caution as they try to navigate these challenging times.

But due to the nature of being a derivatives exchange, in which we help provide the important functions of risk management and price discovery, it has never been more important for us to remain open and transparent, and help protect our clients against volatility and global economic uncertainty.

I don’t think anybody saw this coming – certainly not at the pace at which it did, but we had robust and frequently tested business continuity procedures in place that we quickly invoked to ensure the safety and well-being of our employees, while still being able to provide our members with the vital services they need. We have always had a member-focused approach to our business, and under the current situation, this has never been more true. We are continuing to work with all our clients closely, doing everything we can to help them adapt to this extraordinary and volatile environment.

2. How have your volumes changed over the first quarter?

In the first quarter, we saw increased volumes across a number of our asset classes, most notably Gold and G6 currencies. In Q1, our Gold Futures contract recorded volume growth of 743% compared to the same period last year, while our G6 currencies recorded volume growth of 475%. 

This comes as no surprise as, during periods of uncertainty, derivatives markets like the DGCX allow investors and businesses to protect their positions against price fluctuations. We are confident that throughout the rest of the year, we will continue to see strong volumes with more and more companies looking to limit losses and increase value during these challenging times.

3. How are your systems impacted by the current environment?

The systems and infrastructure we have in place allow trading to be done from anywhere – we have over 148 members across the globe – so we haven’t seen any disruption in this area. 

The real change has been the adaptation and transition to working from home. It is a completely new model for many companies, but we are fortunate to live in a time where there are so many spectacular tools and digital services that make it easier. It has not been without its challenges, but overall the transition has been smooth with no impact on our day to day operations and our ability to serve our clients.

4. How do you prepare for this type of situation to help ensure a resilient, operational environment?

For any business, the importance of having contingency plans in place for these types of situations cannot be overstated. As an Exchange with a large network of members across the globe, our business continuity procedures are designed to deal with a wide variety of potential developments to ensure service resiliency, availability and stability across our trading and clearing platforms. These procedures cover unforeseen events, crises, or out-of-the-ordinary operating environments like the one we are experiencing today and can be adapted as the circumstances dictate.

Consistent communication and a united front with our employees have been key to ensuring the success of working remotely. We are fortunate to have access to such advanced technology, which has allowed the team to communicate and meet virtually with ease.

We are now entering a new phase of the pandemic, with restrictions being carefully lifted and the economy gradually reopening. However, the senior leadership team will remain transparent with our employees and ensure the guidelines issued by the UAE Federal Government and WHO are adhered to. The safety and well-being of our staff remain our highest priority, and we will not make any decisions without due diligence.

5. What are some of the things you’re most happy to have accomplished over the first part of this year amidst a truly chaotic market environment?

Given the remarkable pace in which the world has changed, I am most proud of how quickly and efficiently the DGCX Group has adjusted to the new environment. It has been a true test of our resilience, but we have continued to provide our members with a wide range of products to manage their risk effectively at a time when they need them the most, without compromising the quality of our service.

This ‘Business as Usual’ approach has enabled us to overcome significant challenges and push forward with our strategic plans. We recently signed an agreement with Al Bilad Bank in Saudi Arabia — the bank has listed a gold-backed Exchange Traded Fund on the Saudi Stock Exchange using pricing data from the DGCX’s Shari’ah compliant Spot Gold Contract. And we have a particularly busy period ahead of us, as we prepare to launch new products in response to member demand. In July, we will be expanding our portfolio of currency products with FX Rolling contracts – perpetual rolling FX contracts for three currency pairs. We expect these to be particularly beneficial to our institutional investors by enabling them to hedge more efficiently during this period of heightened volatility.

Undoubtedly many challenges still lie ahead. However, I am confident that the DGCX will emerge in an even stronger position as we continue to provide our members with new opportunities to mitigate and manage their risk.

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