The Antwerp World Diamond Centre (AWDC), formerly HRD, announced an international working panel session for diamond derivatives at its premises in Antwerp on June 28. The working panel, which includes representatives from leading financial institutions, financial exchanges and the diamond business, will focus on achieving a consensus for the development of diamond derivatives contracts.

The working panel was established by PolishedPrices.com following the launch in December 2006 of a discussion paper for diamond derivatives. Contributors to the discussion paper include ABN Amro Bank, ICICI Bank (India), Leumi Bank (Israel) and PolishedPrices.com. As part of this joint effort to develop diamond derivatives, the discussion paper was presented to the International Swaps and Derivatives Association (ISDA), the largest global financial trade association, which represents participants in the privately negotiated derivatives industry.

According to the report, shortages in the raw material against the backdrop of growing demand for diamond jewellery in developing consumer markets, such as China and India within the next five to ten years, have accelerated interest in diamond derivatives. “The lack of a structured OTC (over-the-counter) or listed diamond derivative means that industry players are not able to hedge their future diamond demand or supply, when they know that this will be subject to increased volatility,” PolishedPrices said.

Subject to a consensus, industry players will be invited to comment on a draft concept for standard documentation, which will be available later this year. Speakers at the working panel session include representatives from ABN Amro bank, ICICI Bank, Chicago Board of Trade, ISDA and Cargill. Other participants include among others Diarough, DD Manufacturing, Eurostar, Pluczenik and Rosy Blue.