Dubai Mercantile Exchange prepares 20% share sale

The owners of the Dubai Mercantile Exchange's (DME) plan to sell a stake of up to 20% in the bourse soon to help boost liquidity and attract more international players, industry sources said on Wednesday.

The DME launched trading in June 2007 with a sour Middle East crude futures contract, aiming to become the benchmark for pricing in the world's top oil exporting region.

"The DME is keen to sell the stake soon," said one industry source. The Dubai exchange is looking to bring in big investment banks and oil companies that could boost trade volume," another source said. The DME declined to comment.

The contract has survived longer than past attempts to launch sour crude futures, but has yet to establish itself as a viable vehicle for investment funds and for companies looking to hedge exposure to future energy price risk.

The DME is owned by the New York Mercantile Exchange (NYMEX) and the governments of Dubai and Oman. The NYMEX reached a deal in March to merge with the CME Group, the world's largest derivatives exchange.

The DME would like to push through the stake sale before the CME merger is completed, one source said. NYMEX CEO James Newsome told Dubai Eye radio on 13 May that the DME has been approached by almost every major bank and every major energy company to buy an equity stake in the bourse.

"We are willing to give up to about 20%, not just for one new partner but for a group of new partners that have smaller equity stakes who can help us provide liquidity and volume in the exchange," Newsome said.
/Business Intelligence Middle East/

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Dubai Mercantile Exchange named Exchange Newcomer of the Year

The Dubai Mercantile Exchange Limited (DME) today announced that it has won the "Exchange Newcomer of the Year" 2008 Award from FOW, a leading global derivatives magazine. The prize was announced in London on 7 April 2008 at a prestigious industry event attended by leading figures and institutions from the derivatives and risk management industry and exchange world.

Launched in 1982, FOW is a leading trade publication read extensively by the global derivatives and risk management community and its annual awards seek to recognise innovation and excellence among derivatives exchanges and market participants around the world.

As "Exchange Newcomer of the Year," the DME was honoured by industry participants and the Exchange community. Since its launch in June 2007, the Exchange has emerged as the premier international energy futures and commodities exchange in the Middle East, providing price transparency and market liquidity for crude oil from the world's foremost oil producing and exporting region. The Exchange has developed and lists the Oman Crude Oil Futures Contract, addressing the growing market need for price discovery of Middle East Sour Crude Oil while simultaneously bridging the time-zone gap between Europe, Asia and North America. The Exchange will also be listing two financially settled futures contracts very soon, pending regulatory approval.

Chairman of the DME, Ahmad Sharaf accepted the award in London on behalf of the Exchange. Commenting on the honour, Mr. Sharaf said, "On behalf of everyone at the DME, we are delighted to receive this award. Being named "Exchange Newcomer of the Year," reinforces the success of DME and the significant industry support we have enjoyed since the announcement of our intention to launch the Exchange and in the ten months since we began our operations.

"Importantly, this award also serves to highlight the truly monumental nature of what has been achieved by the DME in establishing the Exchange. The sheer challenge of creating a new international energy futures exchange and a new futures contract simultaneously was tremendous. That the DME has successfully done both has been a historic accomplishment. Today, we see the Oman Crude Oil Futures Contract continuing to gain acceptance as the global benchmark for the pricing of Middle East crude oil and witness new participants from around the world trading on the Exchange every day.

What has been achieved by the DME in such a short period of time is truly remarkable and we are gratified that the efforts of our staff, partners and customers to make the Exchange a success have been recognised by FOW and our industry peers. We fully expect that the DME will continue to build on this strong start and make even greater strides ahead in the year to come."

The DME has acted as a catalyst for economic growth and development in line with the vision for Dubai, and is a testament to the collaboration of its partners - Tatweer, a member of Dubai Holding; the New York Mercantile Exchange, Inc. (NYMEX); and the Oman Investment Fund (OIF).

While still in its infancy, the DME continues to make steady progress. On an almost monthly basis, new highs are being recorded in the volume of contracts traded and the levels of open interest. By March 2008, the total number of Oman Crude Oil Futures contracts traded since launch was over 300,000 contracts, representing 300 million barrels of oil, and the contract has actively traded out as far as February 2010. MENAFN

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Dubai Mercantile Exchange plans new crude oil derivatives contracts

The Dubai Mercantile Exchange plans to launch two new crude oil derivatives contracts in the second quarter in an attempt to build further trading interest on Wall Street.

The new Brent and Oman crude oil futures contracts will be financially-settled. They will allow traders to play the price difference between the high-quality, light-sweet Brent oil and the lower-quality, heavy-sour Oman oil.

DME’s current Oman crude oil futures will remain as a physically-settled contract.

Gary King, DME chief executive told the Financial Times that the exchange was responding to industry demands for financially-settled contracts and instruments to arbitrage the price difference between Brent and Oman.

He added that the new contracts would increase trading activity, particularly among Western-based investors.

Investment banks usually prefer financially-settled contracts to avoid the risk of taking physical delivery of the cargo. Refineries and some traders, however, prefer physically-settled contracts.

The DME is a joint venture between the New York Mercantile Exchange and the governments of Dubai and Oman.

The exchange launched its Oman crude oil futures in June but had struggled until recently to build trading activity. Daily trading volumes, however, have picked up in 2008 with an average of 2,000 trades for the front-month contract in January.

The increase in trading at the DME contrasts with the sharp decline in activity at the rival Middle East sour oil contract which was launched by Atlanta-based ICE, also last year.

The Middle East sour-oil future – a similar contract to DME’s Oman, but financially-settled – traded just 44 contracts in January and has failed to trade for most of the last two weeks.

“The addition of the two new contracts will bring us to a new level” in trading activity,” Mr King said. “We expect an increase in volume thanks to arbitrage trading between the Brent and Oman contracts.”

Industry executives and traders consider that daily volume at the DME’s front-month contract needs to surge to an average of about 10,000 contracts for the exchange to be considered a success.

The launch of the new contracts was awaiting regulatory approval, Mr King said.(FT)

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DME starts new year with record trade volume

The Dubai Mercantile Exchange Limited (DME) announced Tuesday a strong start to 2008 with the setting of a new monthly volume record and achieving the highest level of open interest in its benchmark Oman Crude Oil Futures Contract since the launch of the Exchange in June of last year.

The DME?s Oman Crude Oil Futures Contract traded a record total of 42,903 contracts during January, surpassing the previous monthly volume high of 42,568 set during November?s trading.

To date, the Exchange?s benchmark has traded a total of 245,185 contracts, equivalent to 245.185 million barrels of oil, and has been actively traded as far out as February 2010, providing further evidence of steady growth as the DME continues to develop its global customer base and attract new participants and members.

In another new record, open interest on the DME at the close of January trading stood at 13,773, surpassing by 2,713 contracts the previous monthly high of 11,060 recorded in November 2007.

Open interest is the number of futures contracts entered into but not yet liquidated by an offsetting transaction or by delivery, and is regarded as a leading indicator of success by the industry.

Welcoming the announcement, Ahmad Sharaf, Chairman of the Dubai Mercantile Exchange, said: "This is an excellent start to 2008, and we look forward to the coming months when we intend to increase our product slate to include new futures contracts for our customers to trade.

''The steady growth in volume and record open interest clearly show that our Oman Crude Oil Futures Contract has become the global benchmark for pricing the region's crude oil." (WAM)

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DME announces volume records

The Dubai Mercantile Exchange Limited (DME) announced today that it has set volume records for both exchange-wide trading and for its benchmark Oman Crude Oil Futures Contract for the trade date September 04, 2007.
At 5:15 PM New York time, trading volumes on the DME totalled 8,036 contracts, surpassing the previous record of 6,250 contracts set on June 05. 2007. The Exchange also recorded trades for the first time in its February 2008, March 2008 and April 2008 futures contracts providing more transparency for the trading and pricing of Middle East sour crude oil.
This surge in trading activity comes at the same time as the opening of the DME's electronic trading floor and the announcement by Oman's Ministry of Oil & Gas (MOG) that its October cargoes will be US $68.34. Earlier this year MOG announced that it would price its barrels using the calendar average of the daily settlements of the Oman Crude Oil Futures Contract traded on the DME. Source

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