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IPFS News Link • Dubai

Clearing Demand

• Zero Hedge

By Ahmed Bin Sulayem

Since its establishment in 2005, the Dubai Commodities Clearing Corporation (DCCC) has been the central counterparty for clearing and settlement services to the Dubai Gold & Commodities Exchange (DGCX). Emerging as the largest clearing house in the MENA region by volume, DCCC is now poised to play a far more multinational role in line with the transition of economic power from west to east, while providing a broader range of products and services.

Why the DCCC?

As a wholly owned subsidiary of DGCX, which in turn is a wholly owned subsidiary of Dubai Multi Commodities Centre, DCCC's success may have started out of functionality, but has since expanded to provide a streamlined mechanism for its members with numerous competitive advantages. Outside of providing guaranteed settlement and reduced counterparty risk, DCCC also offers the advantages of transacting and clearing business within the UAE, thus benefiting from a strong and safe business and regulatory environment. For greater transparency and predictability, DCCC also operates a simplified fee structure that applies to all clearing members, including identical margins regardless of commercial or non-commercial status. Overlapping across Asian, European and U.S. trading hours, DCCC's robust regulation, under the Securities & Commodities Authority (SCA), recognition by the Monetary Authority of Singapore (MAS), the Bank of England, and Abu Dhabi Global Market (ADGM) and membership of CCP Global have further minimised systemic risk, while enhancing efficiency for its clients. Providing clearing and settlement services for derivative contracts across four asset classes, namely base and precious metals, hydrocarbons, currencies, and equities, DCCC's consistent investment in state-of-the-art risk management systems, such as ActiveRisk, have enhanced its regulatory compliance in line with the Principles for Financial Markets Infrastructure (PFMI) and technical standards under European Market Infrastructure Regulation (EMIR). As a result, DCCC has achieved several notable milestones since its launch, including clearing 175,690,385 contracts between 2005 – 2023, while becoming one of the most prominent offshore exchanges for INR Futures and the first Shari'ah-compliant spot gold contract exchange. By working with a list of approved clearing banks, DCCC trades an extensive list of currency pairs that require physical delivery on all open positions, with most currencies being settled in USDs. As an additional transparency measure, delivery of the Shari'ah Spot Gold contract takes place through DMCC's Tradeflow, a dedicated online platform for registering ownership of commodities and their subsequent transfers.