Photographer: Andrey Rudakov/Bloomberg

Temasek Unit Backs Startup Diamond Exchange as Trade Begins

  • Vertex Venture Holdings among backers of Singapore project
  • `We may expect volatility in coming days,' chairman says

Singapore state investment company Temasek Holdings Pte is throwing its weight behind a diamond exchange that began trading in the city-state on Thursday, backing the project through venture-capital unit Vertex Venture Holdings.

Investors can trade single stones as well as so-called baskets of investment-grade diamonds electronically for physical settlement, the Singapore Diamond Investment Exchange said in a statement. At first, the bourse aims to support spot trading, with plans for derivatives and exchange-traded products.

The move signals a shift away from a centuries-old system where diamonds are largely traded manually and bilaterally in marketplace-style bourses, according to the exchange. Investors with little access to pricing information in the past will now have a benchmark price to value diamonds as an asset, it said, adding that Vertex Venture is among the backers.

“We may expect volatility in the coming days because it’s the first time in the world that a commodity exchange opens for diamonds,” Alain Vandenborre, executive chairman and founder of the SDiX, said in a phone interview. “In a few weeks, the price will stabilize and we will reach a benchmark price. It will be a consensus in the market.”

Other early investors include Jim Rogers, chairman of Rogers Holdings, and Hsieh Fu Hua, chairman of United Overseas Bank Ltd., a former head of Singapore Exchange Ltd. and a former president of Temasek. Trading hours are from 2:30 p.m. to 6:30 p.m., with broker members in Singapore, Hong Kong, London and Dubai. Vertex has a 19 percent stake, according to Vandenborre.

“By providing the first ever transparent and open price-discovery mechanism for diamonds, the exchange unlocks a major opportunity for investors to trade diamonds as an asset class,” Vandenborre said in the statement. The bourse is “entirely independent of the diamond industry, and fully regulation-ready.”

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