Diamond exchanges, or bourses, are places where diamond dealers, brokers, and manufacturers meet to buy and sell diamonds, either rough or polished. Most of the world’s rough stones are traded in Antwerp’s four diamond bourses. These exchanges also where rumors circulate concerning diamond prices and internal information about companies’ financial situations. As the diamond industry is anything but transparent, diamond exchanges are a vital source of information.
There are 29 diamond bourses in the world, and they are grouped by the World Federation of Diamond Bourses. It is in these bourses that sightholders can supply the other professionals of the diamond world. The open atmosphere allows traders to examine stones with high-tech equipment and encourages friendly competition. Unlike speculative stock exchanges, diamond bourses are places of calm conversation and negotiation. Risks are carefully calculated, and open discussions are held abou supply and demand as well as quality and value of stones while seated together at a table. These exchanges do, however,have strict rules as to how to conduct business. For example all dealers are required to wear ties and can even borrow one if necessary.
There are four bourses in Antwerp which represent 80% of the rough diamonds sold in the world today. These bourses are the Diamond Club of Antwerp, the Bourse du Diamant, Vryes Diamant Handel, and Diamant Kring. Diamond Club of Antwerp is the oldest, 125 years, and the most strict. Bourse du Diamant is 100 years old and has 2500 Jewish members. Vryes Diamant Handel is the Flemmish bourse. Diamant Kring specializes solely in rough stones.
Other cities with diamond exchanges include Vienna, Paris, Milan, New York, Los Angeles, Miami, London, Tel Aviv Johannesburg, Bongkok, Tokyo, Seoul, and Moscow, among others.
A diamantaire must be a member of a bourse to participate in one as there is a very strict deontology. However, visitors can be sponsored by members and have full trading rights. The bourses have their own judicial system outside of Belgian court system. In cases of litigation, 3 people who are not involved in the affair act as judge. This is called the reconciliation commission or the arbitration commission. This method is the fastest way of resolving conflicts between bourse members, and the ruling of the commission is considered final. The Diamond Club of Antwerp was the first to institute such internal arbitration.
The commissions also ensure the integrity of the diamond bourse. A con artist would quickly be discovered and outed by the community. Anyone expelled from any bourse is automatically expelled from all bourses, and his/her photo along with the reason for expulsion are posted in every diamond exchange in the world! These high standards for membership mean that once a deal is made by simple handshake, it is practically set in stone. Mutual trust is a very important aspect of the business; the “mazal” handshake fixes the price, which is respected without the need for any written contract.
The World Federation of Diamond Bourses (WFDB) was created in 1947 to unite diamond exchanges. The WFDB sets the trading practices for diamonds whether they be rough, polished, colored or colorless. It was this federation in partnership with the International Diamond Manufacturers Association that set the international rules for diamond grading standards in 1975. These standards were published in 1978. The two organizations would act together again in 2000 to create the Kimberley Process, a method of ensuring that conflict diamonds do not enter the diamond pipeline.