UK broker takes a shine to new diamond exchange

UK broker takes a shine to new diamond exchange

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A diamond trading platform backed by Singapore’s sovereign wealth fund has signed up UK-based investment manager and prime broker Linear as a member.

Singapore Diamond Investment Exchange (SDiX) said on Tuesday it had added Linear Investments onto its platform, opening up the opportunity UK and European firms to invest in diamonds as an asset class.

Unlike precious metals, no futures or ETFs exists for diamonds and there is no easily accessible spot price or conventional market besides jewelers and pawn shops.

It means would-be investors have no way to gauge the price, as prices vary from vendor to vendor.

SDiX allows firms to trade in single stones and ‘baskets’ which are fungible collections of investment-grade diamonds.

These can be traded electronically and buyers can place indicative price bids and offers by diamond category.

Each basket has an identical total carat weight, and, for each category, comprise an equal number of stones of identical cut, clarity and colour.

The company's aim is to become the only transparent price discovery mechanism for the global diamond trade, giving banks, financial firms and investors a benchmark price to value diamonds as an asset.

"By standardizing global trading in diamonds SDiX has unlocked a new investment opportunity for our clients,” said Jerry Lees, chairman of Linear, which provides tailored prime brokerage services to small and mid-size hedge funds.

“With the introduction of the first regulated trading environment for diamonds, we look forward to working with SDiX to offer our investors the opportunity to diversify their portfolios to include this non-correlated, alternative asset.”

SDiX is supported by a depository that enables the physical settlement of diamonds, and a global network of partners focused on grading, vaulting, settlement and logistics.

Trading on the exchange is scheduled to commence in the second quarter of 2016.

Backers include SDiX Vertex Venture Holdings, one of the longest operating venture capital firms in Asia and a wholly-owned subsidiary of Temasek Holdings, Singapore’s sovereign wealth fund.


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