Dubai launches Shari’a-compliant silver spot contract

The Dubai Gold and Commodities Exchange announced the launch of the first spot silver contract compatible with Islamic law in the Gulf Cooperation Council countries, allowing investors to trade the white metal through a reliable and transparent platform.

The new contract will be available for trading under the symbol “DSSC” on October 27, after the exchange obtains regulatory approval from the Securities and Commodities Authority.

The Dubai Gold and Commodities Exchange will waive the trading fees associated with the contract until December 31, with the aim of stimulating demand for trading.

With the launch of the Shari’a-compliant spot silver contract, investors will be able for the first time to trade physical silver through a Gulf stock exchange and will benefit from the presence of a central clearing house to manage the counterparty, which reduces credit risks in their trades. In addition, investors will be able to trade silver through the Dubai Gold and Commodities Exchange without restrictions on their trading.

The demand for silver has increased today in light of a group of factors, most notably high inflation rates.

According to the World Silver Institute, all major categories of demand for silver recorded record highs in 2022, and the total demand for it grew by 18% to 1.242 billion ounces.

On the other hand, S&P Global Credit Ratings expects the size of the global Islamic finance sector to grow by 10 percent in the period 2023–2024, which will support demand for Shari’a-compliant securities such as the spot silver contract.

“The world will witness an acceleration in demand for silver, coinciding with the increasing use of this precious metal in many major industries, such as solar energy production, and in light of the continued trend of investors towards focusing on diversifying their asset portfolio,” Ahmed Bin Sulayem, CEO of the Dubai Gold and Commodities Exchange, said.

“This strong demand, coupled with the prosperity and development of the global Islamic finance industry, constituted a major impetus and ideal conditions for the Dubai Gold and Commodities Exchange to launch the first Shari’a-compliant silver spot contract in the region,” he added.

“Based on what we sensed about the market need for such products and the success of our Shari’a-compliant spot gold contract, which we launched in 2018, we expect the silver spot contract to receive great interest from traders and investors who are enthusiastic about trading the white metal in a safe and reliable way. We look forward to working closely. With exchange members continuing to bring innovative contracts to the market in the coming months and years,” Bin Sulayem said.

The spot silver contract, approved by elite Shari’a scholars as compatible with Islamic regulations, is backed by a physical asset represented by a silver bar of 999.9 purity and a weight of 900 ounces conforming to the “Emirates Good Delivery Standard.”