Trading Copper Futures on DGCX

Trading Copper Futures on DGCX The Dubai Gold & Commodities Exchange Copper Futures Contracts The Dubai Gold & Commodities Exchange (DGCX) commenc...
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Trading Copper Futures on DGCX

The Dubai Gold & Commodities Exchange

Copper Futures Contracts

The Dubai Gold & Commodities Exchange (DGCX) commenced trading in November 2005 as the Middle East’s first commodity derivatives exchange and has become today, the leading derivatives exchange in the region.

A copper futures contract is an agreement (contract) to buy or sell copper on an agreed future date and for a price fixed in advance.

commodity with parties who are able and willing to bear market risk, or who have inverse risk profiles.

Our range of futures contracts offer participants of the physical commodities markets, such as producers, manufacturers and end users, with a sophisticated means of hedging their price risk exposure. Such price risk management has previously been unavailable to producers in the Middle East. In addition, DGCX provides trading opportunities to financial communities and investment houses in both the Middle East and around the globe who wish to access the growing asset class of commodity and currency derivatives. Benefits specific to DGCX include:

The underlying asset of a futures contract can be copper or any other commodity, foreign currency, equity, interest rate, real estate etc and the contracts are traded exclusively on exchanges, with standardised contract specifications and in a regulated environment.

A copper producer might sell a copper futures contract to protect sales prices, while a wire manufacturer might buy copper futures to protect the cost of raw materials.

Buying or selling a futures contract is not a physical transaction. The contract allows you to buy or sell copper for example, at a later date in the future. The value of the futures contract can rise or fall and is bought and sold on DGCX.

• Trading in a range of products from the precious metal, base metal, energy and currency sectors • Guaranteed settlement and reduced counterparty risk provided by Dubai Commodities Clearing Corporation (DCCC), a subsidiary 100% owned by DGCX

The futures markets help businesses manage their price risk by providing a means of hedging: matching buyers and sellers of a

• The advantage of transacting and clearing business within the UAE and thus the local taxation and regulatory regimes • A simple fee structure - one fee for all participants. All participants also pay the same margin, whether commercial or non-commercial entities

• Robust risk management and surveillance systems • Uninterrupted trading hours from 8:30am – 11:30pm (GMT +4, IST+1.5) • Regulated by the Emirates Securities & Commodities Authority (ESCA)

Copper

Copper was first worked about 7,000 years ago. Its softness, color, and presence in nature enabled it to be easily mined and fashioned into primitive utensils, tools, and weapons. By the mid-1800s, Britain, with superior smelting technology, controlled more than three-quarters of the world copper trade. As the proportion of metal to waste in rock declined, it became economical to position smelters and refiners adjacent to mining sites and ship the final product directly to market. The discovery, in the 19th century, of major copper deposits in North America, Chile, and Australia challenged England‘s preeminent position. In the early 20th century, new mining and smelting techniques were developed in the United States which made it possible to process lower-grade ores, resulting in a dramatic global expansion of the copper market.

Today, copper ranks third in world metal consumption after steel and aluminum. Copper is the best non-precious metal conductor of electricity. In addition, copper‘s exceptional strength, ductility, and resistance to creeping and corrosion, makes it the preferred and safest conductor for building wiring. Copper is also used in power cables, and low voltage applications. Copper is also an essential component of energy efficient motors, transformers and automobiles. Copper market participants across the board use the copper futures to mitigate price risk. Copper contracts are also found in investors portfolios. DGCX Copper futures contracts (DCU) trade in units of 5 MT and are priced in US Dollar per MT. The minimum price fluctuation is $0.5 per MT. It is available for trading electronically from 08:00 to 23:30 Hours Dubai Time (04.30 to 19.30 GMT), Mondays through Fridays. 9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

Since the 1950s, more often than not, the copper market has been in backwardation but has gone into contango for significant periods of time.

Because futures are traded on exchanges that are open public auctions with prices displayed for all to see, the markets perform the important function of price discovery. The prices displayed on the Exchange electronic platform are disseminated to information vendors and news services worldwide. They reflect the marketplace’s collective valuation of how much buyers are willing to pay and how much sellers are willing to accept. The diverse views of many market participants are distilled into a single price.

DGCX Copper Trading Opportunities

• An opening to both regional and international liquidity pools

Copper is the world‘s third most widely used metal, after iron and aluminum, and is primarily used in highly cyclical industries such as construction and industrial machinery manufacturing. Profitable extraction of the metal depends on cost-efficient high-volume mining techniques, and supply is sensitive to the political situation particularly in those countries where copper mining is a government-controlled enterprise.

Copper Futures Trading Example

1,000

• • • • • • • • • •

5 MT cash settled contract that can appeal to both retail and institutional participants Market Makers to ensure competitive price spreads An alternative platform to hedge and mitigate physical copper price exposures Provide investors in the Middle East with access to one of the most liquid metal contracts in the world from within the UAE International investors will have the chance to benefit from the increasing liquidity pool of the Middle East. DGCX clears via its clearing house all contracts so investors funds do not leave the region even for the purpose of clearing and settlement. Competitive transaction cost against target markets (about 13 to 35% difference); significant for HFTs Competitive margins that cater to majority retail demand; 25- times lower than margins in the West, and about 5% lower than South Asia First ever copper contract in the MENA region that allows participants to clear their trades via the domiciled clearing house – DCCC Physical traders may be able to quote copper exports/imports to/from the Sub-continent in INR rather than traditionally in USD, by being able to hedge price exposures through DGCX INR contract

DGCX Copper Futures Hedging Example Most physical commodity futures markets are contango markets whereby prices in the farther dated months are higher than the nearby months, reflecting costs of storage and financing. Sometimes, however, prices get progressively lower the further out the contracts go, generally reflecting current high demand.

backwardation, DGCX copper futures are quoted at US $ 8,450 a tonne.

The following illustrates how a copper consumer would hedge his acquisition costs in the face of an expected increase in materials costs:

By August, cash market copper prices are US $ 8,480 a tonne. The manufacturer liquidates his futures position by selling the futures contracts he purchased for US $ 8,450.

In May, a manufacturer of power generation equipment receives an electric utility’s bid solicitation for a piece of equipment that will require that he take delivery of 100 tonnes of copper by August. The current price of copper is US $8,500 a tonne, but, presuming the copper market is in

profits would be US $120/mt. However, should his prediction is inaccurate and copper price drop to US $8,450/mt, then his losses would be US $70/mt.

DGCX Options on Gold Futures Contract Specification Trading: Contract Symbol

DCU

Underlying Asset

DGCX Copper Futures

Contract Size

5 MT

Pricing Price Quote

US dollars per MT

Minimum Tick Size

US$ 0.50 per MT (US$ 2.50 per contract)

Daily Price Movement Limit

No Limit - Note 1*

Final Cash Settlement Price Basis

The front month settlement price for Copper futures as made public by COMEX for the Last Day of Trading of the DGCX front month contract, converted using conversion factor of 2,204.623 to MT and rounded to the nearest DCU tick.

Quality Specification

Grade 1Electrolytic Copper Cathodes (full plate or cut) conforming to the American Society for Testing and Materials (B115-00), or its latest revision.

Trading Months

March, May, July, September, December. Minimum five (5) Contracts shall be listed for trading at all time

Trading Days

Monday through Friday

Trading Hours

0830 – 2330 hrs

Last Trading Day

Third last Business Day preceding the Delivery Month

New Contract Listing

Business Day immediately following the Last Day of Trading

EFP / EFS/Block Trades

As per DGCX By-Laws Minimum Block size permitted is 200 contracts

Time Limit for EFP/EFS/Block Trade Registration

Up to 15 minutes after cessation of trading on any Trading Day.

Position Limits

Cash Market In May: Current cash price: $8,500 per tonne Manufacturer signs contract for power generation equipment based on DGCX DCU September month copper price of $ 8,450 per tonne

Futures Market In May: Buys twenty contracts of DGCX DCU September copper futures at US $ 8,450 per MT.

In August: Manufacturer buys 100 tonnes. cash copper at $ 8,480 per tonne.

In August: Sells twenty contracts of DGCX DCU September copper futures at US $ 8,480 per MT.

Loss: $ 30 per tonne.

Gain: 30 per tonne.

0

US$perMetricTonne

In order to submit a competitive bid, the equipment manufacturer buys September (e.g. last trading day/expiry 29 August) copper futures at US $ 8,450 a tonne, and submits, and wins, a bid based on that cost.

An investor thinks that the copper price is going to increase from US $ 8,500/mt level in the two months from May. At as result, he decides to buy a September copper futures contract at US $8,520/mt. Assume that his prediction is accurate and copper prices increase to US $8,640/mt; his

Overall Profit/Loss: $ 0 per tonne

Max Open Position Limit

As determined by the Exchange from time to time

Max Order Size

200

Margins Initial Margins

As determined by the Exchange from time to time using SPAN Margin System.

Note 1*: There will be no limits on intra-day price movements, however to restrict data-entry errors the system will not allow entry of orders having prices higher or lower than US$ 150 as compared to the Previous Close Price. Exchange shall relax the intra-day price range for the prices of the contract approaching the US$ 150 limit.

The Dubai Gold & Commodities Exchange

Copper Futures Contracts

The Dubai Gold & Commodities Exchange (DGCX) commenced trading in November 2005 as the Middle East’s first commodity derivatives exchange and has become today, the leading derivatives exchange in the region.

A copper futures contract is an agreement (contract) to buy or sell copper on an agreed future date and for a price fixed in advance.

commodity with parties who are able and willing to bear market risk, or who have inverse risk profiles.

Our range of futures contracts offer participants of the physical commodities markets, such as producers, manufacturers and end users, with a sophisticated means of hedging their price risk exposure. Such price risk management has previously been unavailable to producers in the Middle East. In addition, DGCX provides trading opportunities to financial communities and investment houses in both the Middle East and around the globe who wish to access the growing asset class of commodity and currency derivatives. Benefits specific to DGCX include:

The underlying asset of a futures contract can be copper or any other commodity, foreign currency, equity, interest rate, real estate etc and the contracts are traded exclusively on exchanges, with standardised contract specifications and in a regulated environment.

A copper producer might sell a copper futures contract to protect sales prices, while a wire manufacturer might buy copper futures to protect the cost of raw materials.

Buying or selling a futures contract is not a physical transaction. The contract allows you to buy or sell copper for example, at a later date in the future. The value of the futures contract can rise or fall and is bought and sold on DGCX.

• Trading in a range of products from the precious metal, base metal, energy and currency sectors • Guaranteed settlement and reduced counterparty risk provided by Dubai Commodities Clearing Corporation (DCCC), a subsidiary 100% owned by DGCX

The futures markets help businesses manage their price risk by providing a means of hedging: matching buyers and sellers of a

• The advantage of transacting and clearing business within the UAE and thus the local taxation and regulatory regimes • A simple fee structure - one fee for all participants. All participants also pay the same margin, whether commercial or non-commercial entities

• Robust risk management and surveillance systems • Uninterrupted trading hours from 8:30am – 11:30pm (GMT +4, IST+1.5) • Regulated by the Emirates Securities & Commodities Authority (ESCA)

Copper

Copper was first worked about 7,000 years ago. Its softness, color, and presence in nature enabled it to be easily mined and fashioned into primitive utensils, tools, and weapons. By the mid-1800s, Britain, with superior smelting technology, controlled more than three-quarters of the world copper trade. As the proportion of metal to waste in rock declined, it became economical to position smelters and refiners adjacent to mining sites and ship the final product directly to market. The discovery, in the 19th century, of major copper deposits in North America, Chile, and Australia challenged England‘s preeminent position. In the early 20th century, new mining and smelting techniques were developed in the United States which made it possible to process lower-grade ores, resulting in a dramatic global expansion of the copper market.

Today, copper ranks third in world metal consumption after steel and aluminum. Copper is the best non-precious metal conductor of electricity. In addition, copper‘s exceptional strength, ductility, and resistance to creeping and corrosion, makes it the preferred and safest conductor for building wiring. Copper is also used in power cables, and low voltage applications. Copper is also an essential component of energy efficient motors, transformers and automobiles. Copper market participants across the board use the copper futures to mitigate price risk. Copper contracts are also found in investors portfolios. DGCX Copper futures contracts (DCU) trade in units of 5 MT and are priced in US Dollar per MT. The minimum price fluctuation is $0.5 per MT. It is available for trading electronically from 08:00 to 23:30 Hours Dubai Time (04.30 to 19.30 GMT), Mondays through Fridays. 9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

Since the 1950s, more often than not, the copper market has been in backwardation but has gone into contango for significant periods of time.

Because futures are traded on exchanges that are open public auctions with prices displayed for all to see, the markets perform the important function of price discovery. The prices displayed on the Exchange electronic platform are disseminated to information vendors and news services worldwide. They reflect the marketplace’s collective valuation of how much buyers are willing to pay and how much sellers are willing to accept. The diverse views of many market participants are distilled into a single price.

DGCX Copper Trading Opportunities

• An opening to both regional and international liquidity pools

Copper is the world‘s third most widely used metal, after iron and aluminum, and is primarily used in highly cyclical industries such as construction and industrial machinery manufacturing. Profitable extraction of the metal depends on cost-efficient high-volume mining techniques, and supply is sensitive to the political situation particularly in those countries where copper mining is a government-controlled enterprise.

Copper Futures Trading Example

1,000

• • • • • • • • • •

5 MT cash settled contract that can appeal to both retail and institutional participants Market Makers to ensure competitive price spreads An alternative platform to hedge and mitigate physical copper price exposures Provide investors in the Middle East with access to one of the most liquid metal contracts in the world from within the UAE International investors will have the chance to benefit from the increasing liquidity pool of the Middle East. DGCX clears via its clearing house all contracts so investors funds do not leave the region even for the purpose of clearing and settlement. Competitive transaction cost against target markets (about 13 to 35% difference); significant for HFTs Competitive margins that cater to majority retail demand; 25- times lower than margins in the West, and about 5% lower than South Asia First ever copper contract in the MENA region that allows participants to clear their trades via the domiciled clearing house – DCCC Physical traders may be able to quote copper exports/imports to/from the Sub-continent in INR rather than traditionally in USD, by being able to hedge price exposures through DGCX INR contract

DGCX Copper Futures Hedging Example Most physical commodity futures markets are contango markets whereby prices in the farther dated months are higher than the nearby months, reflecting costs of storage and financing. Sometimes, however, prices get progressively lower the further out the contracts go, generally reflecting current high demand.

backwardation, DGCX copper futures are quoted at US $ 8,450 a tonne.

The following illustrates how a copper consumer would hedge his acquisition costs in the face of an expected increase in materials costs:

By August, cash market copper prices are US $ 8,480 a tonne. The manufacturer liquidates his futures position by selling the futures contracts he purchased for US $ 8,450.

In May, a manufacturer of power generation equipment receives an electric utility’s bid solicitation for a piece of equipment that will require that he take delivery of 100 tonnes of copper by August. The current price of copper is US $8,500 a tonne, but, presuming the copper market is in

profits would be US $120/mt. However, should his prediction is inaccurate and copper price drop to US $8,450/mt, then his losses would be US $70/mt.

DGCX Options on Gold Futures Contract Specification Trading: Contract Symbol

DCU

Underlying Asset

DGCX Copper Futures

Contract Size

5 MT

Pricing Price Quote

US dollars per MT

Minimum Tick Size

US$ 0.50 per MT (US$ 2.50 per contract)

Daily Price Movement Limit

No Limit - Note 1*

Final Cash Settlement Price Basis

The front month settlement price for Copper futures as made public by COMEX for the Last Day of Trading of the DGCX front month contract, converted using conversion factor of 2,204.623 to MT and rounded to the nearest DCU tick.

Quality Specification

Grade 1Electrolytic Copper Cathodes (full plate or cut) conforming to the American Society for Testing and Materials (B115-00), or its latest revision.

Trading Months

March, May, July, September, December. Minimum five (5) Contracts shall be listed for trading at all time

Trading Days

Monday through Friday

Trading Hours

0830 – 2330 hrs

Last Trading Day

Third last Business Day preceding the Delivery Month

New Contract Listing

Business Day immediately following the Last Day of Trading

EFP / EFS/Block Trades

As per DGCX By-Laws Minimum Block size permitted is 200 contracts

Time Limit for EFP/EFS/Block Trade Registration

Up to 15 minutes after cessation of trading on any Trading Day.

Position Limits

Cash Market In May: Current cash price: $8,500 per tonne Manufacturer signs contract for power generation equipment based on DGCX DCU September month copper price of $ 8,450 per tonne

Futures Market In May: Buys twenty contracts of DGCX DCU September copper futures at US $ 8,450 per MT.

In August: Manufacturer buys 100 tonnes. cash copper at $ 8,480 per tonne.

In August: Sells twenty contracts of DGCX DCU September copper futures at US $ 8,480 per MT.

Loss: $ 30 per tonne.

Gain: 30 per tonne.

0

US$perMetricTonne

In order to submit a competitive bid, the equipment manufacturer buys September (e.g. last trading day/expiry 29 August) copper futures at US $ 8,450 a tonne, and submits, and wins, a bid based on that cost.

An investor thinks that the copper price is going to increase from US $ 8,500/mt level in the two months from May. At as result, he decides to buy a September copper futures contract at US $8,520/mt. Assume that his prediction is accurate and copper prices increase to US $8,640/mt; his

Overall Profit/Loss: $ 0 per tonne

Max Open Position Limit

As determined by the Exchange from time to time

Max Order Size

200

Margins Initial Margins

As determined by the Exchange from time to time using SPAN Margin System.

Note 1*: There will be no limits on intra-day price movements, however to restrict data-entry errors the system will not allow entry of orders having prices higher or lower than US$ 150 as compared to the Previous Close Price. Exchange shall relax the intra-day price range for the prices of the contract approaching the US$ 150 limit.

The Dubai Gold & Commodities Exchange

Copper Futures Contracts

The Dubai Gold & Commodities Exchange (DGCX) commenced trading in November 2005 as the Middle East’s first commodity derivatives exchange and has become today, the leading derivatives exchange in the region.

A copper futures contract is an agreement (contract) to buy or sell copper on an agreed future date and for a price fixed in advance.

commodity with parties who are able and willing to bear market risk, or who have inverse risk profiles.

Our range of futures contracts offer participants of the physical commodities markets, such as producers, manufacturers and end users, with a sophisticated means of hedging their price risk exposure. Such price risk management has previously been unavailable to producers in the Middle East. In addition, DGCX provides trading opportunities to financial communities and investment houses in both the Middle East and around the globe who wish to access the growing asset class of commodity and currency derivatives. Benefits specific to DGCX include:

The underlying asset of a futures contract can be copper or any other commodity, foreign currency, equity, interest rate, real estate etc and the contracts are traded exclusively on exchanges, with standardised contract specifications and in a regulated environment.

A copper producer might sell a copper futures contract to protect sales prices, while a wire manufacturer might buy copper futures to protect the cost of raw materials.

Buying or selling a futures contract is not a physical transaction. The contract allows you to buy or sell copper for example, at a later date in the future. The value of the futures contract can rise or fall and is bought and sold on DGCX.

• Trading in a range of products from the precious metal, base metal, energy and currency sectors • Guaranteed settlement and reduced counterparty risk provided by Dubai Commodities Clearing Corporation (DCCC), a subsidiary 100% owned by DGCX

The futures markets help businesses manage their price risk by providing a means of hedging: matching buyers and sellers of a

• The advantage of transacting and clearing business within the UAE and thus the local taxation and regulatory regimes • A simple fee structure - one fee for all participants. All participants also pay the same margin, whether commercial or non-commercial entities

• Robust risk management and surveillance systems • Uninterrupted trading hours from 8:30am – 11:30pm (GMT +4, IST+1.5) • Regulated by the Securities & Commodities Authority (SCA)

Copper

Copper was first worked about 7,000 years ago. Its softness, color, and presence in nature enabled it to be easily mined and fashioned into primitive utensils, tools, and weapons. By the mid-1800s, Britain, with superior smelting technology, controlled more than three-quarters of the world copper trade. As the proportion of metal to waste in rock declined, it became economical to position smelters and refiners adjacent to mining sites and ship the final product directly to market. The discovery, in the 19th century, of major copper deposits in North America, Chile, and Australia challenged England‘s preeminent position. In the early 20th century, new mining and smelting techniques were developed in the United States which made it possible to process lower-grade ores, resulting in a dramatic global expansion of the copper market.

Today, copper ranks third in world metal consumption after steel and aluminum. Copper is the best non-precious metal conductor of electricity. In addition, copper‘s exceptional strength, ductility, and resistance to creeping and corrosion, makes it the preferred and safest conductor for building wiring. Copper is also used in power cables, and low voltage applications. Copper is also an essential component of energy efficient motors, transformers and automobiles. Copper market participants across the board use the copper futures to mitigate price risk. Copper contracts are also found in investors portfolios. DGCX Copper futures contracts (DCU) trade in units of 5 MT and are priced in US Dollar per MT. The minimum price fluctuation is $0.5 per MT. It is available for trading electronically from 08:00 to 23:30 Hours Dubai Time (04.30 to 19.30 GMT), Mondays through Fridays. 9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

Since the 1950s, more often than not, the copper market has been in backwardation but has gone into contango for significant periods of time.

Because futures are traded on exchanges that are open public auctions with prices displayed for all to see, the markets perform the important function of price discovery. The prices displayed on the Exchange electronic platform are disseminated to information vendors and news services worldwide. They reflect the marketplace’s collective valuation of how much buyers are willing to pay and how much sellers are willing to accept. The diverse views of many market participants are distilled into a single price.

DGCX Copper Trading Opportunities

• An opening to both regional and international liquidity pools

Copper is the world‘s third most widely used metal, after iron and aluminum, and is primarily used in highly cyclical industries such as construction and industrial machinery manufacturing. Profitable extraction of the metal depends on cost-efficient high-volume mining techniques, and supply is sensitive to the political situation particularly in those countries where copper mining is a government-controlled enterprise.

Copper Futures Trading Example

1,000

• • • • • • • • • •

5 MT cash settled contract that can appeal to both retail and institutional participants Market Makers to ensure competitive price spreads An alternative platform to hedge and mitigate physical copper price exposures Provide investors in the Middle East with access to one of the most liquid metal contracts in the world from within the UAE International investors will have the chance to benefit from the increasing liquidity pool of the Middle East. DGCX clears via its clearing house all contracts so investors funds do not leave the region even for the purpose of clearing and settlement. Competitive transaction cost against target markets (about 13 to 35% difference); significant for HFTs Competitive margins that cater to majority retail demand; 25- times lower than margins in the West, and about 5% lower than South Asia First ever copper contract in the MENA region that allows participants to clear their trades via the domiciled clearing house – DCCC Physical traders may be able to quote copper exports/imports to/from the Sub-continent in INR rather than traditionally in USD, by being able to hedge price exposures through DGCX INR contract

DGCX Copper Futures Hedging Example Most physical commodity futures markets are contango markets whereby prices in the farther dated months are higher than the nearby months, reflecting costs of storage and financing. Sometimes, however, prices get progressively lower the further out the contracts go, generally reflecting current high demand.

backwardation, DGCX copper futures are quoted at US $ 8,450 a tonne.

The following illustrates how a copper consumer would hedge his acquisition costs in the face of an expected increase in materials costs:

By August, cash market copper prices are US $ 8,480 a tonne. The manufacturer liquidates his futures position by selling the futures contracts he purchased for US $ 8,450.

In May, a manufacturer of power generation equipment receives an electric utility’s bid solicitation for a piece of equipment that will require that he take delivery of 100 tonnes of copper by August. The current price of copper is US $8,500 a tonne, but, presuming the copper market is in

profits would be US $120/mt. However, should his prediction is inaccurate and copper price drop to US $8,450/mt, then his losses would be US $70/mt.

DGCX Copper Futures Contract Specification Trading: Contract Symbol

DCU

Underlying Asset

DGCX Copper Futures

Contract Size

5 MT

Pricing Price Quote

US dollars per MT

Minimum Tick Size

US$ 0.50 per MT (US$ 2.50 per contract)

Daily Price Movement Limit

No Limit - Note 1*

Final Cash Settlement Price Basis

The front month settlement price for Copper futures as made public by COMEX for the Last Day of Trading of the DGCX front month contract, converted using conversion factor of 2,204.623 to MT and rounded to the nearest DCU tick.

Quality Specification

Grade 1Electrolytic Copper Cathodes (full plate or cut) conforming to the American Society for Testing and Materials (B115-00), or its latest revision.

Trading Months

March, May, July, September, December. Minimum five (5) Contracts shall be listed for trading at all time

Trading Days

Monday through Friday

Trading Hours

0830 – 2330 hrs

Last Trading Day

Third last Business Day preceding the Delivery Month

New Contract Listing

Business Day immediately following the Last Day of Trading

EFP / EFS/Block Trades

As per DGCX By-Laws Minimum Block size permitted is 200 contracts

Time Limit for EFP/EFS/Block Trade Registration

Up to 15 minutes after cessation of trading on any Trading Day.

Position Limits

Cash Market In May: Current cash price: $8,500 per tonne Manufacturer signs contract for power generation equipment based on DGCX DCU September month copper price of $ 8,450 per tonne

Futures Market In May: Buys twenty contracts of DGCX DCU September copper futures at US $ 8,450 per MT.

In August: Manufacturer buys 100 tonnes. cash copper at $ 8,480 per tonne.

In August: Sells twenty contracts of DGCX DCU September copper futures at US $ 8,480 per MT.

Loss: $ 30 per tonne.

Gain: 30 per tonne.

0

US$perMetricTonne

In order to submit a competitive bid, the equipment manufacturer buys September (e.g. last trading day/expiry 29 August) copper futures at US $ 8,450 a tonne, and submits, and wins, a bid based on that cost.

An investor thinks that the copper price is going to increase from US $ 8,500/mt level in the two months from May. At as result, he decides to buy a September copper futures contract at US $8,520/mt. Assume that his prediction is accurate and copper prices increase to US $8,640/mt; his

Overall Profit/Loss: $ 0 per tonne

Max Open Position Limit

As determined by the Exchange from time to time

Max Order Size

200

Margins Initial Margins

As determined by the Exchange from time to time using SPAN Margin System.

Note 1*: There will be no limits on intra-day price movements, however to restrict data-entry errors the system will not allow entry of orders having prices higher or lower than US$ 150 as compared to the Previous Close Price. Exchange shall relax the intra-day price range for the prices of the contract approaching the US$ 150 limit.

Trading and Clearing DGCX provides a transparent, electronic trading platform for discovering prices and trading a range of commodity and currency derivatives contracts. Our online trading platform is user friendly, adaptable and can be accessed from anywhere in the world. Clearing and Settlement - DCCC DGCX offers market participants the advantage of having its own clearing system and functionality; the Dubai Commodities Clearing Corporation (DCCC). DCCC is a wholly owned subsidiary of DGCX and acts as the central counterparty for all trades executed on the exchange. Our clearing procedures meet the global standards recommended by the Bank of International Settlements. DCCC provides a settlement guarantee for all trades executed on DGCX, reducing the counterparty default risk for market participants. This protection is known as the “Settlement Guarantee Fund“ (SGF) and is based on commitments from clearing members, shareholders, insurance policies and credit lines. The fund has substantial reserves and has experienced zero default since inception. Trading system, order entry and matching process Members can connect to the electronic trading platform via various modes of connectivity from terrestrial links and VPNs to public networks. This guarantees ease of access for trading, clearing, settlement and obtaining real time information. Customers and members can opt for their preferred medium of connectivity. Orders from around the world are submitted to the Trader Work System (TWS) by members and routed through to the Central Order Book (COB) where orders are matched on a price, time priority algorithm. Access via Independent Software Vendors Members can access the exchange directly or via an independent software vendor (ISV). Our trading platform is supported by leading ISVs such as; PAT Systems, GL Trade, Realtime Systems, Orc Software, Omnesys Technologies Pvt Ltd and FlexTrade UK Ltd. Safe and Secure Trading Environment The DGCX trading platform incorporates a highly sophisticated and automated risk management system in order to reduce human intervention to the bare minimum. DGCX is the first exchange in the region to receive the respected ISO 27001:2005 certification for information security management systems, demonstrating the exchange’s safe, secure and transparent trading environment.

An Internationally Compliant Exchange DGCX is regulated by the Emirates Securities and Commodities Authority (ESCA). ESCA is a member of the International Organisation of Securities Commissions (IOSCO) and is also the regulatory authority for the Dubai Financial Market and the Abu Dhabi Securities Market. The exchange follows strict regulatory, compliance, market surveillance and corporate governance standards in order to ensure an orderly and transparent market. In 2008, DGCX was approved as a Recognised Market Operator (RMO) by The Monetary Authority of Singapore, demonstrating recognition as an international and compliant exchange. Member undergo a strict approval process with regards to financial strength, securities background and commodities brokerage. Our unique initiative; “Compliance Officer for DGCX Operations” CODO), is supported by the International Monetary Fund and the World Bank. It ensures correct capture of KYC data, proper documentation, procedures for customer diligence and the reporting of suspicious market activity. Overview of DGCX and DCCC Market Participants DGCX has approximately 252 members and 65 clearing members who come from financial centres across the world including Zurich, London, Chicago, Singapore, Auckland and Hong Kong, as well as the UAE. New members continue to join the exchange from around the world. We offer various types of membership based on whether members wish to trade for themselves, on behalf of their clients or both. Direct access is provided via the DGCX front end or via their own or vendor software.

Benefits of Trading DGCX Futures Contracts • • • • •

Ideal location and trading hours which cross over between time zones of Europe & Asia Liquid markets and tight spreads provided by market makers throughout trading day Essential mechanism for managing price risk. Relative trading opportunities with other international markets DGCX futures are cleared via Dubai Commodities Clearing Corporation (DCCC), removing counterparty credit risk and providing guaranteed settlement to each transaction

How to start trading copper futures contracts on DGCX To trade DGCX futures contracts, buy and sell orders should be submitted via a member of the exchange, by telephone or possibly via an order routing (internet) service. Only exchange members can actually execute orders directly onto the exchange and so market participants should open a trading account with a member firm in order to start trading, or become a direct member of DGCX. The list of DGCX member firms offering brokerage and clearing services can be found on our website at: www.dgcx.ae/memberslist.aspx.

Membership • •

DGCX membership is open to corporations or partnerships Members typically located in the UAE; can be located outside from some jurisdictions

DGCX offers the following types of membership: • Broker Membership - Broker Members can trade all DGCX contracts either on behalf of their clients or on a proprietary basis (for their own trading book). •

Trade Membership - Trade Members can trade all DGCX contracts on a proprietary basis only.



Introducing Broker Membership - An Introducing Broker can introduce clients to Broker Members to transact business on DGCX. The Introducing Broker is not permitted to handle client’s funds or securities and will not be held responsible for the activities of clients introduced by them.



Clearing Membership - Broker and Trade Members can apply for membership of the Dubai Commodities Clearing Corporation (DCCC), which entitles them to clear DGCX transactions. Financial institutions, banks and other entities who wish to clear but not trade DGCX business can also apply for special clearing membership.



Rebatable Annual Membership: An applicant can opt to pay an Annual Membership Lease Fee to become a Trade or Broker Member. The annual Membership Fee is rebated in part or in full; subject to the Member achieving certain Minimum Annual Volume Targets.

For further information on how to become a member; application forms, admission fees, minimum net current tangible asset requirements, minimum capital requirements and regulatory requirements, please refer to the ‘Membership’ section of our website.

Further Information For further information on DGCX, our products and how to access our markets, please contact us on the details below. Alternatively, please refer to the contract specifications for product related information. Delayed prices for all DGCX contracts are available on our website.

Dubai Gold & Commodites Exchange Tel: +971 (0)4 361 1616, Web: www.dgcx.ae,

Email: [email protected], Twitter: www.twitter.com/dgcx

FaceBook: dgcxcommunity

Reference herein to “DGCX” shall mean the Dubai Gold & Commodities Exchange DMCC. This publication is for information only and does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. Neither DGCX nor its affiliates, associates, representatives, directors or employees, shall be responsible for any loss or damage that may arise to any person due to any action taken on the basis of this publication. DGCX shall not be responsible for any errors or omissions contained in this publication. All information, descriptions, examples and calculations contained in this publication are for guidance purposes only and should not be treated as definitive. No part of this publication may be redistributed or reproduced without written permission from DGCX. Those wishing either to trade futures and options contracts on DGCX, or to offer and sell them to others should establish their regulatory position before doing so. DGCX is regulated by the Emirates Securities and Commodities Authority (ESCA). ESCA is a member of the International Organisation of Securities Commissions (IOSCO).

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