Trade begins on Singapore's electronic diamond exchange

(From left) Alain Vandenborre, chairman and founder, Linus Koh, CEO, and Latika Kundu, COO of the Singapore Diamond Investment Exchange.
(From left) Alain Vandenborre, chairman and founder, Linus Koh, CEO, and Latika Kundu, COO of the Singapore Diamond Investment Exchange.ST PHOTO: AZMI ATHNI

SINGAPORE - Diamonds can now be bought more cheaply and traded more easily, as trading on a Singapore-based electronic diamond exchange started on Thursday.

On the Singapore Diamond Investment Exchange's (SDIX) platform, accredited investors can buy diamonds at wholesale prices, Mr Linus Koh, chief executive of the Singapore Diamond Investment Exchange, told the Straits Times.

"The exchange allows accredited investors to trade in physically settled diamonds with full price transparency in a regulated environment, for the first time," he said.

The wholesale prices refer to prices at which diamonds - freshly cut and polished from rough stone - are sold to jewellery manufacturers.

In the past, to invest in diamonds individuals would usually have to buy them through a jewellery shop at a retail prices that had a mark up.

The opening of the exchange represents a huge shift in the way diamonds are currently traded and the most significant change in the diamond trading practice in years, noted Mr Alain Vandenborre, SDIX executive chairman and founder.

At present, diamond trades are mostly negotiated bilaterally, between a buyer and seller. With the electronic platform, however, the highest bid price and the lowest selling price will be shown in real time. The prices of trades on the exchange will also be reported.

"This gives the market much more transparency and information," said Mr Koh.

Investors can buy diamonds at such prices on the exchange because the top 20 companies which process the rough stone will sell their diamonds on the exchange. Diamonds can be traded on the exchange from Monday to Friday between 2.30 and 6.30 in the afternoon. Investors who wish to obtain more information can visit https://www.sdix.sg/.

The diamonds will first be certified by the Gemological Institute of America before they are traded on the exchange, and will be stored in vaults. When a trade occurs, the diamond remains in the vault but ownership is transferred from the seller to the buyer. It can remain in the vault or be retrieved by buyers.

The exchange hopes to offer more sophisticated products like exchange traded funds and derivatives.Any accredited investor worldwide with an account with a brokerage registered with the exchange can trade on it.

Temasek Holdings has thrown its weight behind the exchange, backing the project through venture-capital unit Vertex Venture Holdings.

jkoh@sph.com.sg