Last Updated: 11/11/2008
Q. What is the Dubai Mercantile Exchange?
A. The Dubai Mercantile Exchange Limited (DME) is the Middle East’s first
futures exchange and lists the world's first physically delivered Middle East sour crude oil futures contract, the DME Oman
Crude Oil Futures Contract, which has become the most successful exchange traded
contract for price transparency in the East of Suez markets.
Established as a joint venture between Tatweer (a member of Dubai
Holding), the New York Mercantile Exchange, Inc. (NYMEX) and the Oman Investment
Fund (OIF), the DME recently announced
that strategic investors, including J.P. Morgan, Goldman Sachs, Morgan Stanley,
Vitol, Concord Energy, Casa Energy Trading, and a Shell company, acquired an
equity stake in the DME. CME Group Inc. (CME Group) completed its acquisition of
NYMEX Holdings, Inc. in Aug 2008, thereby acquiring a 25% shareholding in the
DME.
Q. What is the New York Mercantile Exchange (NYMEX)?
A. NYMEX is
the world’s largest physical commodity exchange, headquartered in
New York City. On
August 22, 2008, CME Group Inc. announced that it had completed its acquisition
of NYMEX Holdings, Inc. creating a market with a pro forma 2007 average trading
volume of approximately 14.2 million contracts per day in the first two quarters
of 2008. Customers from more than 85
countries trade CME Group products, primarily electronically, and provide
customers around the world with access to all major benchmark asset classes,
including interest rates, equity indexes, foreign exchange, energy, agricultural
commodities and metals. Corporate headquarters of the combined company will
remain in Chicago
with CME Group’s New York
office located at the NYMEX World Headquarters.
Q. What is the CME Group?
A.
CME Group is the world’s largest
and most diverse derivatives exchange.
Formed by the 2007 merger of the Chicago Mercantile Exchange (CME) and
the Chicago Board of Trade (CBOT), CME Group serves the risk management needs of
customers around the globe. As an
international marketplace, CME Group brings buyers and sellers together on the
CME Globex electronic trading platform and on its trading floors.
CME Group offers the widest range of benchmark products available across
all major asset classes, including futures and options based on interest rates,
equity indexes, foreign exchange, agricultural commodities, and alternative
investment products such as weather and real estate.
CME Group is traded on the New York Stock Exchange and NASDAQ under the
symbol “CME”.
Q. What is Tatweer?
A. Tatweer is a member of Dubai Holding and acts as the strategic and
operational driver of a selected group of Dubai Holding entities in developing
new initiatives to support the development of Dubai. Tatweer’s portfolio is divided into
energy and healthcare, tourism and entertainment, and industry and knowledge,
and includes a number of projects in these key sectors.
Q. What is Oman Investment Fund?
A. OIF is an investment arm of the Government of Oman. The objective of OIF is
to invest globally in a diversified portfolio including private equity, real
estate and other strategically important projects and entities.
Q. Why was DME created?
A. Approximately 60% of the world’s crude oil reserves
are located in the Gulf region with Asian buyers
importing more than two-thirds of their crude from the
Middle East, yet until the DME’s launch in June 2007
there was no sufficiently transparent pricing mechanism
for crude oil being delivered into
Asia. The industry demonstrated a need for a liquid,
transparent East of Suez benchmark for crude oil, and
the DME responded to that need with its flagship DME
Oman Crude Oil Futures Contract.
Q. Where is the DME located and how is it regulated?
A. The DME is located within the Dubai International Financial Centre (DIFC), a
financial free zone in Dubai,
and is authorised and regulated by the Dubai Financial Services Authority
(DFSA). The DFSA is a regulatory body established within the DIFC, providing a
world-class regulatory regime which promotes the highest internationally
recognised standards of integrity, transparency and efficiency. The DFSA
Rulebook has been modeled on international best practice and the DFSA is the
regulator of all financial and ancillary services undertaken in or from the
DIFC. In addition, the DME has received further regulatory approvals, no
objection or legal opinions from 23 other regulators including the
U.S. Commodity Futures Trading
Commission (CFTC), bringing global standards in commodity trading to the world’s
premier hydrocarbon region.
Q. Who should use the DME?
A. The primary role of the DME is to provide energy market participants with a
venue for managing price risk. This includes companies from all sectors of the
industry, including regional and international energy producers, refiners,
traders, and financial institutions.
Q. What contracts are currently trading on the DME? What future contracts will be listed?
A. The DME lists the DME Oman Crude Oil Futures Contract, the world’s first
physically delivered Middle East sour crude oil
futures contract, which has become the most successful exchange traded contract
for price transparency in the East of Suez markets.
. Additionally, the DME listed two financially settled contracts in July
2008, the DME Brent Crude Oil Financial Contract and the DME Oman Crude Oil
Financial Contract. In the future, the DME may look at developing additional
products to meet the risk management needs of its clients across the world's
fastest growing economies, which could include new energy, metals and financial
products which fit in with the DME’s position as a commodities marketplace
looking at the needs of the Middle Eastern region. The DME undertakes extensive
market consultation and secures all relevant regulatory approvals prior to
launching any new contracts.
Q. What impact does the DME have on Middle East oil prices?
A. Middle East oil prices are affected by
supply and demand. The DME is not changing supply and demand fundamentals, but
is merely providing an efficient mechanism for buyers and sellers to transact
and manage risk. This leads to improved market transparency and price discovery
that accurately reflects the underlying fundamentals of the
Middle East crude oil market.
Q. What has the response been to DME thus far from the industry?
A. The DME has been greatly encouraged by the
overwhelming support that it has received from the
industry, which is reflected in the strong membership,
healthy volumes and open interest, and record breaking
physical deliveries. The trading community has indicated
a serious need for a secure, transparent and well
regulated futures exchange in the region and the DME
meets these requirements.
Q. What holiday schedule will DME follow?
A. There are three electronic trading holidays for the DME which are the same as
for NYMEX contracts: New Year’s Day,
Good Friday and Christmas Day. For more information, please see the holiday
calendar:
http://www.dubaimerc.com/holidaycalendar.html
Q. How do I find out more information on the DME?
A. To find out more information, please contact the Exchange at +971 4 365 5500 or at
info@dubaimerc.com
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