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Michael Vaughan Worthless or Worthwhile Diamond Finance interviews Michael Vaughan the newly appointed executive director of the World Federation of Diamond Bourses – WFDB. As a longstanding member of Antwerp’s Diamantkring and recently knighted by the King of Belgium for his multiple contributions to the Belgian and worldwide diamond industry, Michael Vaughan, (5x) is the first to be appointed to this newly created post. DF What with there being so many diamond organisations, do we still need the WFDB? Michael The WFDB was founded in 1947 and is now celebrating its diamond anniversary. It was preceded by the International Federation of Diamond Bourses founded in 1907. Some of the diamond organisations were in fact created by the WFDB. The World Diamond Council –WDC- was created by the WFDB in the 197s and was influential in creating the classification of polished diamonds that we use today and addressed conflict diamonds which is now managed by the governmental KP structure. The International Diamond Manufacturers Association – IDMA – is closely allied to the WFDB and we hold our conferences concurrently. The WFDB is the only organisation that self regulates 26 bourses in 17 countries with 15,0000 personal member and a further 5,000 members through corporate memberships. The WFDB set the lead on fracture filling and HPHT. Each organization has its own goals and objectives and it does not make sense to combine them all into one entity. DF What teeth do you have to make you relevant at the transaction level? Michael Our regulations are designed to ensure and promote consumer confidence. If you buy from an WFDB bourse member you have a much higher degree of assurance. If a bourse sanctions a member we make sure that all bourses are made aware of this. If the WFDB feels that a member should be sanctioned, we can force his bourse to impose sanctions. The WFDB regulations for individual bourses allow for the speedy arbitration of disputes across borders and these arbitration decisions can be ratified by the courts and enforced by them. DF Stock exchanges around the world are consolidating, why are not seeing a similar process among the bourses and do we really need four bourses in Antwerp? Michael Each bourse has its own history and the fact that a bourse exists means that it meets a particular set of demands. Bourses are there to provide services to their members and not just to facilitate trade in diamonds. DF Why have we not seen a bourse for regulating the on-line trading platforms? Michael The WFDB does not prevent the trade of diamonds with non-bourse members and the online trading platforms are not bound by WFDB regulations. However, when trading on the online platforms, if you buy from or sell to a WFDB bourse member you know where you stand. DF What is the WFDB’s view on commoditisation, and more pointedly, why will we be seeing diamond derivatives regulated by a commodity exchange and not by a bourse Michael The WFDB is not involved with the transactions of diamonds but with the behaviour of its members. We are concerned with the confidence in the industry and if you want to enter into a diamond derivative contract with a non WFDB entity then caveat emptor – buyer beware. It will become easier to identify WFDB bourse members in the future as our WFDBMARK becomes more prominent throughout the industry. DF What are the plans for the future of the WFDB? Michael The diamond industry is based on its members’ word, once ‘mazal’ is said a deal is closed. We are proud of that, but it means more than just closing a deal, it also means that a bourse member stands for tradition, integrity and accountability. These are principles that we shall continue to promote thought our WFDBMARK. We intend to go to Washington to lobby the US government to ease up on the Patriot Act were the proprietors are WFDB bourse members. In this era of turmoil in corporate ethics, the WFDB has a challenge to ensure that our members maintain their ethical lead over other industries, and this is a challenge we resolve to meet.
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