UAE based derivatives exchange, the Dubai Gold & Commodities Exchange (DGCX) has seen exceptional growth in its volumes this year, led largely by its currency futures contracts. Volumes on the five year old derivatives exchange surpassed 1.5 million contracts in October and the exchange could end the year close to the 2 million mark. Investors’ desire to hedge exchange rates in a volatile currency environment has been the prime driver of growth in trading activity but the accessibility provided by the exchange’s FIX platform has also been playing a silent but vital role in promoting this increase.
We have significantly expanded our international member base over the last five years and much of this growth has been possible because of the accessibility that the FIX Application Programming Interface (API) offers. By facilitating seamless electronic order routing into the DGCX’s trading platform, the FIX Protocol has allowed DGCX to attract a wide number of international members from the US, Europe and Asia. FIX has allowed us to diversify so that our business model comprises a healthy mix of both broker and trade members, and encompasses global Independent Software Vendors (ISVs) who bring the latest technology and algorithms.
A joint initiative of the Dubai Multi Commodities Centre (DMCC), Financial Technologies (India) Limited and the Multi Commodity Exchange of India Limited (MCX), DGCX commissioned a FIX gateway less than a year after its launch to allow members to connect their proprietary trading applications seamlessly on a real-time basis with the DGCX market.
FIX provided international members with easy access to DGCX’s portfolio of futures contracts in precious metals, currencies and energy. While all product classes have seen growth during 2010, investors have shown particular interest in DGCX currency futures, including the Euro, Indian Rupee, British Pound, Japanese Yen, Australian Dollar, Canadian Dollar and Swiss Franc (all versus the US Dollar).
The DGCX FIX interface supports the exchange’s empanelment process for ISVs, which enables software companies to provide “Private Order, Risk Management & Trading Software” (PORTS) on a FIX platform to members of the Exchange. Access to diverse software and algorithms has allowed DGCX members to implement more sophisticated trading strategies and offer more innovative products to their clients.
As FIX is the universal messaging language adopted by trading firms across the world, its use has supported DGCX in developing a community of international participants who are essential to maintaining liquidity in our markets. DGCX could not have had such a wide range of international algorithmic traders without FIX. Such participants have helped to ensure that DGCX provide competitive, liquid markets with tight bid and offer spreads, throughout the trading day for our key contracts.