The first product to be issued by Deutsche Boerse Commodities will be Xetra-Gold, a physically backed bond. Every unit represents the option of one gram of gold to be delivered and can be bought and sold from 14 December 2007 onwards via the Xetra trading platform.
Deutsche Boerse AG and its partners Bankhaus Metzler, Bank Vontobel, Commerzbank AG, Deutsche Bank AG, DZ Bank AG and Umicore AG & Co. KG formed the joint venture Deutsche Boerse Commodities GmbH at the end of November 2007.
The bond combines the benefits of physical gold with exchanged-traded securities. Gold counts as protection against inflation and is also a commodity with a low correlation.
The materials technology group Umicore AG & KG supplies the gold, which is stored in the vault of the central securities depository Clearstream Banking Frankfurt AG, a Deutsche Boerse subsidiary.
The securities issued can be traded on an ongoing basis without a time delay and can also be exchanged for the underlying physical amount of gold via the investor’s own bank.
“We are delighted to have joined forces with such well-known partners, all of which possess many years of expertise in the financial and commodities market. By bundling our strengths, we aim to help reduce the trading inefficiencies on the existing commodities markets and to enable more cost-effective trading. Both investors and trading participants will benefit from the creation of a liquid market,” Martina Gruber, managing director, Deutsche Boerse Commodities.
“Portfolio experts advise clients to invest a certain proportion of their assets in commodities, as they perform relatively independently of other types of securities. Nevertheless, there is a lack of cost-effective investment alternatives. With innovative securitizations, we will offer investors direct access to the commodities market and a cost-effective opportunity to diversify their portfolios,” adds Steffen Orben, managing director, Deutsche Boerse Commodities GmbH.