World's First Electronic Diamond Exchange

If diamonds are an investment asset is still a question being debated.However, the Singapore Diamond Investment Exchange (SDiX) is all set to give diamonds a new market place where they can be traded as an asset class at real-time transactional, wholesale prices beginning this September. In this interview, Alain Vandenborre, Executive Chairman and Founder of the SDiX shares business model and his vision for SDiX.

Q1) Kindly explain the business model of SDiX.
A1) The SDiX platform is the first of its kind globally to utilise proven exchange technology to create a new marketplace for the global diamond trade. Designed to deliver price transparency and liquidity to the diamond market through a real-time price discovery mechanism, diamonds will be able to be traded as a commodity, thus enabling the creation of a new asset class.

The SDiX business model opens the market to new participants from financial markets, primarily accredited financial investors and traders, and provides the ability to monetize investments made, through which diamonds may be acquired at real-time transactional, wholesale prices.

Q2) What are the key strengths of SDiX? A2)SDiX is a fully electronic spot commodity exchange designed to deliver price transparency and liquidity to the market. With real time transactional data readily accessible, SDiX will become the authoritative source of price information in diamond trading, and its inclusion of a broad diversity of other participants deepens liquidity and instills confidence as diamonds gradually become established as a financial asset.

SDiX also provides a self-regulated marketplace, creating a fair, orderly and transparent global platform in which diamonds may be acquired at real-time transactional, wholesale prices, for diamond and financial traders as well as accredited investors to acquire stones at market price. This removes the need to go through private traders who have little or no regulation.

In addition, the exchange is positioned geographically in Singapore, a transparent and business friendly jurisdiction in Asia, and a globally recognised financial center.

Q3) How many products do you offer for trading at SDiX?
A3)For trading purposes, SDiX will offer diamonds as single stones (single, large diamonds), as well as baskets (of small diamonds), which will be categorised into groups based on their quality, taking into account size, colour and cut. SDiX’s technology platform can process 200,000 orders per second when receiving orders from multiple co-located clients. Live prices will also be available on the exchange's website.

Q4) Where will you source your diamonds from and who will be grading and certifying them?
A4)SDiX has established a key strategic relationship with the Bharat Diamond Bourse (BDB), the world's largest diamond market, whose suppliers will ensure a steady supply of consignment diamonds ready for trade.

All diamonds listed on the SDiX will be graded by the globally recognised GIA (Gemological Institute of America).

Q5) How do you intend to overcome difficulty of diamond pricing as diamonds are priced as per size? Who monitors the price behaviour as it keeps fluctuating?
A5) The SDiX trading platform like any other exchange platform provides for anonymous trading and transparent price discovery mechanism. The trades shall be matched based on the price-time priority basis of the orders placed into the trading system. The pricing is market-driven based on the various factors including demand and supply. All pricing on SDiX shall be on per carat basis. The exchange platform provides for various check measures like base price, price-bands, close price computed on the volume weighted average pricing as some of the key measures to monitor pricing.

Q6) Is it possible for the investors to take physical possession of the diamonds?
A6)Yes, as SDiX offers a platform to trade in physically settled diamonds. Upon a successful bid through the Exchange, the investor’s diamond will be stored in either one of SDiX’s secure, dedicated and physical vaults, one in Singapore’s Le Freeport and operated by Malca-Amit, and the other operated in Bharat Diamond Bourse's facilities in Mumbai, India. When/if the investor decides to cash in/out on his investment, the diamond will then be transported by Malca-Amit to the investor.

Q7) How do you intend to market diamonds as a popular investment tool?
A7) The exchange plans to promote diamonds as a new asset class for investment. The market participants would be free to use this new asset class as per their risk and business profile.

Q8) In the current market conditions, do you think diamonds are a good investment option?
A8) As an exchange we are wholly-independent and neutral on market conditions at a point in time. We are building infrastructure and the ecosystem around it, to allow diamonds to be traded in a fair, orderly and transparent manner.

Q9) Who are the pioneer members of the exchange? What are the criteria for the membership?
A9) SDiX currently has more than 25 Pioneer Members, comprising Approved Suppliers and Broker Members. They include esteemed names like Paragon Diamonds, Kiran Gems Pvt. Ltd., Shree Ram krishna Exports Pvt. Ltd., Hari Krishna Exports Pvt. Ltd., Rosy Blue, Sheetal Group, Leo Schachter Diamonds, KP Sanghvi, Kapu Gems and UOB Kay Hian, representing participation across six countries: Singapore, India, Hong Kong, U.S., Belgium, and UK.

SDiX has multiple membership opportunities, and is open to all companies that meet the relevant criteria, as established by the Exchange’s Rules and Regulations and subject to the application procedures. For more information on meeting membership requirements, please visithttps://www.sdix.sg/membership/requirements/