In the latest initiative on on using diamonds as an investment instrument, the Indian Commodity Exchange (ICEX) will launch a systematic investment plan (SIP) for retail buyers to acquire diamonds in three different sizes — 0.3. 0.5 and 1 carat.
The ICEX had previously got Securities & Exchange Board of India (SEBI) approval to trade diamond futures.
In the current plan, SIP payments could be as low as ₹900 ($14) a month for two and a half years. In order to purchase a diamond, a consumer would need to open an account with a broker on the ICEX, complete the know-your-client (KYC) process and then deposit some money with the broker. The buyer also has to tell the broker the exact date of each month when the broker should buy a portion of the diamond (in electronic form) on behalf of the buyer.
Indian consumers have so far been able to buy mutual funds and gold funds through the SIPs. The diamond SIP would be a worldwide first, ICEX officials said.
A consumer who is unable to make subsequent SIP payments will still own the portions of the diamond already bought in an electronic record. He or she can resume payments when able, ICEX officials said. A consumer with an ongoing SIP can also sell the already acquired portions of the diamond at any time on the exchange.
SIPs will vary according to the price for the diamond quoted on the bourse. Malca Amit is the authorised shipper for physical possession of the diamond and the repository of the stone during the SIP.