One cent equals 2 mg and 100 cents make it 1 carat. Diamond prices increase with the size or carat count of the stone.
NEW DELHI: Diamond has been democratised. It’s no longer an exclusive preserve of the rich and the famous.
The Indian woman can now own a full 1 carat De Beers-certified diamond by investing just Rs 120 a day!
Last week, world’s first diamond futures exchange kicked off trading in India, aiming to cater to investors and buyers across the spectrum.
From enabling companies in the world’s largest producer of cut and polished gems to better hedge price risks to allowing housewives to accumulate diamond one cent at a time in electronic form, Indian Commodity Exchange (ICEX) has changed the game.
The bourse, backed by Reliance CapitalBSE -0.27 % and MMTCBSE -0.91 %, has already started trading in 1 carat (100 cent) contracts and will eventually add contracts in 50 cents and 30 cents, said Sanjit Prasad, Managing Director.
Prasad said small investors have the option to buy 1 cent at a time for as little as Rs 3,200, accumulate them in electronic form over time and take physical delivery when one has managed to amass 1 carat.
“As an investor you can buy one cent (or one unit). You can keep buying more and accumulate units over time. Once 100 units (1 carat) are accumulated, you can ask for physical delivery of the underlying,” Prasad told an investor conference in Delhi over the weekend.
One cent equals 2 mg and 100 cents make it 1 carat. Diamond prices increase with the size or carat count of the stone.
The diamond contracts saw strong interest in the first week of trade. On the first day of its launch on August 28, the bourse recorded total volume (in units) of 27 carats (2,715 cents) for November futures. It shot up to 176 carats this past Monday and 159 carats on Wednesday, ICEX data showed.
Contract specifications say a trader can order the maximum size of 3,000 cents with a minimum tick size of Re 1 for every cent of diamond traded.
The exchange has kept the trading and delivery sizes low to attract participation from importers, brokers, traders, processors, suppliers, stockists and jewellery manufacturers.
The exchange will soon introduce contracts in 50 cents and 30 cents. The delivery centre for the 1 carat contracts expiring in November, December and January will be Surat, India’s hub for diamond polishing.
According to Bloomberg, Indian diamond cutters polish about 14 of every 15 of the world’s gems. They imported about 153 million carats of rough diamonds in the financial year ended March 31, 2017. Polishers source their gems from De Beers, the world’s biggest diamond producer, and also through direct imports from some producing nations.
Surat contributes more than 85 per cent of polished diamonds in the world.
ICEX specifies that diamond sellers on the bourses need to get their diamonds certified by the De Beers-promoted International Institute of Diamond Grading and Research. They would get credits in electronic form equivalent to the carat deposited.
The exchange has 20 large diamond companies including Rosy Blue (India) and Kiran Gems as members, Prasad said.
Consumer demand accounts for 95 per cent of the global diamond market. As an investment, diamond accounts for just 5 per cent of total value of polished diamonds.
Production or mining of rough diamonds is negligible in India, compared with the total volume mined across the world. In India, diamond mining is concentrated in the states of Madhya Pradesh and Chhattisgarh.
[“Source-economictimes”]