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    Traders' New Best Friend: Diamond Futures Set to Sparkle on Moscow Exchange

    © Sputnik / Aleksandr Utkin
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    The Moscow Exchange could join famous diamond markets like the Israeli Diamond Exchange and the Antwerp Diamond Bourse, as Russian diamond mining company Alrosa creates the opportunity to buy futures contracts in diamonds, news agency RBK reported.

    Russian diamond mining company Alrosa is in talks with the Moscow Exchange to offer investors there the chance to invest in up to $1 billion worth of diamonds, news agency RBK reported on Friday.

    While rare stones such as blue diamonds are subject to sharp changes in their valuation, other diamonds could offer a more stable investment than precious metals, as their value tends to fluctuate by less than five percent a year. 

    Alrosa spokesman Aleksandr Tikhomirov told RBK that the company intends to offer futures contracts in near colorless or faint yellow diamonds, with a weight of 0.5 – 0.59 carats (5.2 mm diameter) or 1-1.49 carats (6.5-7.5 mm diameter).

    Investors will be able to buy futures backed by 1/100 of a diamond of the various weights; for example, if a one carat diamond is worth around $8,000 and a 0.5 carat diamond around $2,500, futures in 1/100 of the former will cost about $80, and in the latter $25.

    Extracting diamond-bearing kimberlite ore at ALROSA's Internatsionalny diamond field in Mirny, Republic of Sakha (Yakutia)
    © Sputnik / Aleksandr Utkin
    Extracting diamond-bearing kimberlite ore at ALROSA's Internatsionalny diamond field in Mirny, Republic of Sakha (Yakutia)
    Alrosa will set the prices of their contracts according to global prices, the price set by the Russian Ministry of Finance, and the volume of their own production and sales.

    Mihail Orlenko, head of the commodities trading department of the Moscow Exchange, told RBK that the option could work if Alrosa is prepared to act as market maker, and maintain the liquidity of the instrument on the market.

    "Trading diamonds on the exchange could appeal to private investors seeking a new instrument for investment, and jewelers," he said.

    The Alrosa Group operates in nine countries and across ten regions of Russia. It produced more than 38.3 million carats of diamonds (37.1 million tons) in 2015, accounting for more than a third of global rough diamond production.

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    diamond, commodities, Moscow Exchange, Russia
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