World's first diamond exchange to be launched in Singapore in September 2015

The World’s first commodities exchange in physically settled diamonds will be launched in Singapore in September this year.

Called the Singapore Diamond Investment Exchange, it aims to create a new marketplace for the global diamond trade and expected to further strengthen the Republic's position as a commodities trading hub.

"When you look at any of the large, established, global trading hubs for precious minerals, they always have several asset classes. It's not just gold but also diamonds, and for example, like London. So I guess Singapore hopes to emulate similar hubs," said International Enterprise Singapore's assistant chief executive Satvinder Singh.

The exchange "is designed to deliver price transparency and liquidity to the diamond market through a real-time price discovery mechanism, allowing diamonds to be traded as a commodity, thus enabling the creation of a new asset class," as it is said on its website.

Based on the strategy and regulations of the securities and commodities market, the exchange will be able to handle 500,000 transactions per second.

Investors in Singapore will be able to trade diamonds at real-time transactional, wholesale prices.

At the beginning, trading will take place over four hours daily and eventually the trading hours will be extended to cover the time zones of key global financial markets.

"Primarily, what people do when they look for diamonds, they go into this huge inventory database and eventually have to pick up the phone and trade, and negotiate discount or even travel to see the diamonds before they buy," said Mr Alain Vandenborre, executive chairman and founder of the Singapore Diamond Investment Exchange.

"Today there's no commodity technology in the diamond industry and commodity technology means that you bring price discovery through automation system."

The founders are silent on the exact cost of the platform, only mentioning it took two years and a few million dollars to develop.

The platform is supported by Vertex Ventures Holdings, a fully-owned venture capital subsidiary of Temasek Holdings. The pioneer broker for the exchange will be UOB Kay Hian. Later in the year, it will potentially have over 25 pioneer members, including players like Paragon Diamonds and Kiran Gems.

The exchange is directed and well-equipped for the needs of diamond industry participants. Before they can tap the exchange, investors and traders have to obtain accreditation.

Diamonds traded will possess a Kimberley Process certificate, which verifies that the precious stones are not blood diamonds, or conflict diamonds, which have been mined in a war zone and sold to finance insurgencies.