LES MALE

Dubai 2020 | FINANCE | INTERVIEW

Developing a currency trade niche that is not only geopolitically relevant but also profitable has been a boon for the currency and Emirate.

Les Male
BIOGRAPHY

Les Male has nearly 30 years' experience in the global commodities industry with particular expertise across exchanges, risk management, and trading systems. He is the CEO of DGCX, the largest and most diversified derivatives exchange in the Middle East. He joined DGCX in 2018 from Nasdaq, where he was responsible for EU/UK client facing activities on the global commodities product suite. He started his career managing strategic projects for the UK Network Code, later becoming commercial director at EnMO and then continuing in that role for APX-Endex. In 2010, he became the European managing director for the Green Exchange. After its acquisition by the CME Group, his role took on the European gas and Global LNG strategy for Nymex, prior to joining Nasdaq in 2014.

What has driven your success over the last few years?
A large part of our success was due to internal restructuring to provide the foundations for growth, and in 2019 we continued to build upon this success. We achieved that growth by resetting and refocusing our strategy on becoming a more member-led exchange; we have over 175 global members, and they are the ones driving the products we list on the exchange. To a degree, our products have to be unique and regionally relevant and innovative. Futures trading, particularly that on a purely price basis, is not sharia-compliant due to its speculative nature. However, we worked with the two sets of sharia scholars Armanie Advisors and Minhaj Advisory to come up with a design for our sharia-compliant spot gold product, whilst receiving additional fatwas as to the veracity of its sharia compliance. When we talk about 'spot' products, this infers it is a product that is traded today for delivery tomorrow, whereas derivatives are traded today for a price at a set point in the future. My priority is to make the business more regionally relevant, and the sharia-compliant gold contract is a step in that direction. Our product was the region's first and is currently the world's only exchange-listed contract that bridges that gap. We are also the world's largest liquidity pool for Indian rupee trading outside of India, though we also list other currencies for trading, including G6 and Chinese yuan.

As the exchange is based in the Middle East, how limited is your derivatives trading?
Our client base is global. Although many of our clients are based in the GCC and originate from India, others come from China, Singapore, Europe, and elsewhere. We are in one of the most commercial cities on the planet, so why not tap into the potential here? The derivatives exchange is not widely known in the region, but we decided to base it here because it is a global business. Dubai also offers an advantageous time zone that allow us to remain open during the most liquid parts of the day in Asia, Europe, and the Americas. Recently, we launched aluminum and zinc contracts because our members wanted us to. The UAE is among the top-five aluminum producers in the world, and aluminum and zinc are heavily used in the construction industry.

What other commodities are you looking at to make the exchange more locally relevant?
We have trialed the base metals contracts: aluminum and zinc and, if necessary, lead and nickel. These products also complement our existing copper contracts. There are other emerging markets relevant to Dubai and the GCC that have wealthy clients, companies, and institutional investors exposed to their home currency's fluctuations. We already deal with currencies, so bringing in another currency is a marginal evolution. All the currencies we offer are paired to the US dollar, so people are trading the reference price against the dollar rather than trading the currency itself. We look at the local market demand, and the nationalities present here are the ones with exposure back home that perhaps do not have the tools to hedge their price risk exposure. We want to offer that currency, to which end I have a dedicated product development team researching new products for us to launch.

How do you plan to attract more local members?
Being strong in Indian rupee trading means we not only have a product, but also a fantastic marketing tool, allowing us to promote the hedging of risk with one of the UAE's largest trading partners. This concentration into one currency is actually working to our advantage and with the recent volatility has opened additional doors for us. That said, we need to diversify, and looking locally at the GCC makes a great deal of sense. All the local banks have their own sharia boards, and the UAE consolidates that into one central bank sharia board. We are working hard with the Dubai Islamic Economy Development Centre (DIEDC) to ensure we are part of that project and process. If our sharia products get certified by the appropriate board, it would certainly provide a boost to the exchange.