The Dubai Mercantile Exchange Limited (DME), a joint venture between Tatweer, a member of Dubai Holding, and the New York Mercantile Exchange Inc., (NYMEX), announced today that the Middle East's first energy futures exchange will launch officially on 1st May 2007.
In another major milestone, the DME also announced the completion of its state-of-the-art trading floor, located in the Dubai International Financial Centre. The two-storey high, 500 square-meter trading floor is the first of its kind in the region. It will bring together a broad range of local, regional and international participants, and is equipped with the latest technology for traders to electronically transact energy futures contracts and manage their risk.
The Initial three contracts to be traded on the DME will be the physically delivered Oman Crude Oil Futures Contract, and two financially settled contracts, a Brent-Oman spread contract and a WTI-Oman spread contract. Trading of the contracts on DME Direct TM is expected to begin simultaneously across key energy trading centers at the following local times on May 1st : 6:00 Singapore, 2:00 Dubai, 23:00 London time (previous day) ,and (18:00 New York time previous day).
In addition, DME, ENOC Supply & Trading (LLC) and Emirates Airline are exploring the potential development of a jet fuel futures contract in collaboration with other industry stakeholders with a view to listing the first jet fuel futures contract on the Exchange later in 2007.
Reporting a high volume of Off-Floor Member, Market Maker and Clearing Member applications, the DME is encouraging customers to contact their NYMEX Clearing Members and Independent Software Vendors to ensure that they are ready to trade on 1st May, 2007.
The establishment of an exchange inside the Dubai International Financial Centre (DIFC) and the associated clearing and settlement services to be provided by the NYMEX Clearinghouse are subject to regulatory approval from the Dubai Financial Services Authority (DFSA) and the licensing of the DME as an Authorised Market Institution (AMI) to operate as an exchange.
Ahmad Sharaf, Chairman of the DME Board of Directors and Senior Vice President, Energy & Healthcare - Tatweer, commented: "We are delighted to announce the date on which the Dubai Mercantile Exchange will become operational. Extraordinary efforts have resulted in enormous progress being made over the past several months to ensure that all the elements are in place for a successful launch.
"We are especially pleased with the Sultanate of Oman's historic decision to adopt forward pricing of its crude oil, based on the daily settlement price of the DME's Oman Crude Oil Futures Contract, and our consensus of agreement with the Sultanate's Ministry of Finance to acquire a 30% equity stake in the DME. Oman's confidence and support for the DME, as reflected by these recent announcements and the continuation of Dubai's role in this regard underscore the true significance and impact the DME is expected to have on the future pricing of Middle East sour crude oil."
Gary King, Chief Executive of the DME, said: "The market response continues to be overwhelmingly positive and all of our efforts are now focused on the countdown to launch. The regulatory approvals process is well advanced in Dubai as well as in key international jurisdictions. We have a state-of-the-art trading floor and electronic trading platform, unique contracts ready to trade as well as others under development, and membership and market-maker applications being received on a daily basis.
"These are exciting times at the DME and the momentum is now fully underway. We expect to be making further important announcements in the run-up to our launch on May 1st".