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Riding on the increased trading activities of commodities such as diamond and tea, Jumeirah Lakes Towers (JLT) is witnessing rapid growth. Managed by the Dubai Multi Commodities Centre (DMCC), the free zone has reported a 30 per cent jump in the number of companies operating from this commercial hub in the last one year.
A total of 1,027 new companies registered themselves at this free zone in the first six months of 2014, taking the total number to around 8,500.
The free zone is unique as it offers its members trading platforms such as Dubai Gold and Commodities Exchange, Dubai Diamond Exchange, Dubai Pearl Exchange and Dubai Tea Trading Centre. Along with gold, diamond and other precious metals, DMCC is also involved in the trading of agricultural products like cotton, tea, cocoa and soya. Similar to a stock market, a commodity exchange is a marketplace for buyers and sellers to engage in trading commodities directly. Future trading is a common mode of transaction where physical delivery of goods is fixed for a future date at a price agreed by the buyer and the seller.
The free zone also offers DMCC Tradeflow, a concept that boosts commodity trading by offering finance solutions to owners who have stored their products in warehouses. Through an electronic platform, owners of goods stored in warehouses can request warehouse keepers to issue DMCC Tradeflow Warrants that represent the ownership of their goods. These warrants can be used by the owners to pledge beneficial ownership or transfer title of the stored goods to financiers as collateral in exchange of working capital.
The hub has also witnessed a growing demand from companies and banks which are looking to store gold and precious metals in its state-of the-art vault facilities.
•Vault facilities are becoming popular for storage of gold, etc.
•DMCC Tradeflow offers finance solutions to owners of goods
•Jumeirah Lakes Towers offers commodity exchange platforms
Source: S. Dhar, Special to Properties
The writer is a freelancer