June 28 (Bloomberg) -- Bankers, diamond and exchange experts meeting in Belgium moved a step closer today to creating derivative contracts linked to diamond prices and said the potential market for the contracts could be as much as $200 billion.

Representatives from around the globe, including Dutch financial-services company ABN Amro Holding NV; ICICI Bank Ltd., India's largest lender; and the Chicago Board of Trade, spent the day in Antwerp's diamond district thrashing out an initiative to develop diamond-derivative contracts.

``The first conclusion is that derivatives are absolutely inevitable,'' said Charles Wyndham, founder of diamond information provider PolishedPrices.com, who took part in the discussion. ``ICICI Bank came out with what they thought might be the size of the market, which could be between'' $150 billion and $200 billion.

Diamond-derivative contracts would give buyers of diamonds and investors the possibility of buying the gems at fixed prices in the future, enabling speculation on forward price movements, as occurs in derivative markets in precious metals. About $18 billion of diamonds a year are used in jewelry, according to ABN Amro.

Polishedprices.com, which established today's working panel, is one of two organizations looking into derivative contracts for diamonds. Rapaport Group, a New York-based provider of diamond prices, is seeking approval from the U.S. Commodity Futures Trading Commission to start the world's first diamond-futures contracts in September.

It may take up to a year to start offering contracts, PolishedPrices.com said. It plans to set up a smaller task force to continue today's discussion. There were 35 participants at today's working panel. The contracts would start for polished gems and would probably be a ``non-physical'' product, one that didn't include the actual delivery of the gems.

The task force will need to iron out such issues as gem quality and benchmark prices.

``There is a clear reluctance to start selling funds for private investors when there is no benchmark price that is acceptable in this market,'' said Loet Kniphorst, head of ABN Amro's diamond and jewelry division in Antwerp. ``I would like to see a number of my clients able to hedge some of their risks.''

To contact the reporter on this story: Andrew Clapham in Brussels at aclapham@bloomberg.net.

Last Updated: June 28, 2007 14:43 EDT