DOING BUSINESS AT A DIAMOND EXCHANGE
More than 90 percent of the diamonds available in the market at any point in time pass through one or more of the 29 recognized diamond exchanges operating worldwide, meaning that a diamond exchange is the preeminent source of supply of diamonds for any manufacturer, wholesaler or retailer of diamond jewelry.
How does one do business at a diamond exchange?
It is important to point out that there are two distinct classes of buyers at a diamond exchange. The first is the diamond exchange member, who may be affiliated to that specific diamond bourse, or to any other one of the 30 WFDB bourses around the world. The second buyer is an individual who is not a member of any bourse.
Only diamond exchange members have full access to all the bourse facilities, including its trading floor. The reason for this is that a diamond exchange is an exclusive club, where full trading privileges are extended only to members and/or affiliates. Any diamond exchange member can buy or sell directly, to and from other diamond exchange members.
But, in order for a buyer who is not a diamond exchange member or affiliate to do business at a diamond exchange, he or she must develop a commercial relationship with a diamond exchange member. It is the member who will supply that buyer directly and also represent him or her in negotiations with any other diamond exchange members. In this way, a non-member will have access to the all merchandise being offered for sale in the diamond exchange.
Typically, a non-diamond exchange member will meet with the diamond exchange member in the office of the latter, where he or she will be invited to view merchandise, which belongs to that diamond exchange member. The diamond exchange member may also show merchandise belonging to other members, or alternatively the other members will visit the office where they will show their merchandise.
If a sale is made, the transaction will be between the buyer and the diamond exchange member with whom he or she has a commercial relationship. Commission fees will be settled between the various diamond exchange members.
While the non-diamond exchange members will not have access to the bourse trading floor, they will have access to the trading center, although typically they will need to be invited in by the member with whom they have a commercial relationship. Once inside the center, however, they will be able to use most facilities, and in the case of the Panama Gem & Jewelry Center they will enjoy the benefits of the Vaguil Free Trade Zone, including an exemption on customs and duties on all transactions completed within the facility.