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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 that it has been approved as an Authorised Market Institution (AMI) by the Dubai Financial Services Authority (DFSA). The DME is the second Exchange within the Dubai Financial Centre (DIFC) to be issued such a licence from the DFSA.
The AMI licence allows the DME to operate as an exchange under the regulatory jurisdiction of the DFSA, and this announcement marks a major advance in the DME’s development as the Middle East’s first energy futures exchange. The DME is scheduled to launch on June 1, 2007 pending regulatory approvals of its clearing arrangement.
Welcoming the decision, Ahmad Sharaf, Chairman of the DME, said: “This is a vital and long-awaited milestone for us as we continue to progress towards the historic launch of the Middle East’s first energy futures exchange. I would like to thank the entire DME team for their dedication and hard work over the past three years. I am convinced that our accomplishments to date will lead to the successful establishment of the Middle East’s first energy future exchange.”
Sarah Watts, Chief Compliance Officer of the DME, further commented: “The DFSA represents regulatory independence and operates within a robust legal regime that promotes confidence and certainty for international players. We are delighted that the DME will be operating within a world-class regulatory framework that is dedicated to best international practice. The DFSA has been most diligent and constructive in guiding us through this process and our thanks go to them.”
Upon launch, the DME will list three contracts for trading: The physically delivered Oman Crude Oil Futures Contract and two financially settled futures contracts, the Brent-Oman Spread Contract and a WTI-Oman Spread Contract. The Oman Crude Oil Futures Contract has been developed through extensive industry consultation and is set to become the Middle East’s first and only physically-backed energy futures contract. Deliverability will provide true price convergence between the cash markets and the physical markets.
Gary King, Chief Executive Officer of the DME, added: “We continue to be overwhelmed by the support and confidence that we are receiving from the industry. Our customers want greater price transparency. They want to be able to better manage their risk. And they know that the DME will deliver just that.
The industry understands what an achievement it will be to launch the Middle East’s first and only physically-backed energy futures contract and a totally new, world-class exchange. The DME is committed to providing liquidity for producers, consumers and traders and we look forward to delivering outstanding services to our members throughout the world from day one.”
Working together, the DME and AUD will aim to develop a comprehensive offering of courses, which will make the Academy the most highly recognised commodity and risk management training centre in the region with a particular emphasis on energy futures trading. The DME, which is expected to launch in the fourth quarter of 2006, will initially develop and trade an Oman crude oil futures contract with other energy and commodity contracts to follow.
Courses at the Academy will be jointly established by the two parties and delivered by world-class instructors and professionals at AUD. It is envisioned that in its initial stages, the DME-AUD Academy will offer seminars, trader certification examinations, simulated trading modules and a commodity trading diploma.
It is expected that these programmes will make a significantly positive contribution towards the development of human capital and training in the region as the financial markets continue their rapid development and centres like Dubai emerge as leading global financial hubs.
Applications will be open to a wide range of candidates, including university students and graduates, local traders, individual investors, international oil companies, banks, hedge funds, Futures Commission Merchants and consumers such as airlines and shipping companies.
Ahmad Sharaf, Senior Vice President, Energy and Healthcare – Tatweer, a division of Dubai Holding & Chairman of the Board of Directors of the Dubai Mercantile Exchange, said: “The DME-AUD Academy is part of the DME’s commitment to nurturing regional expertise in the futures and commodities sectors and we are delighted to be doing this with a partner like the American University in Dubai. This initiative has positive implications for the region, enabling more effective participation and developing an exceptional talent pool in the futures and commodities sectors. It will educate regional and international participants and partners at the highest level, arming them with the right skill-set to take full advantage of the opportunities the DME and the sector have to offer.”
Mr. Elias Bou Saab, Executive Vice President at the American University in Dubai, said: “This project is another milestone in the development process and success story of Dubai and the region. Establishing an academy, that can provide students and professionals with the tools necessary for conducting a successful and effective energy futures trading, is testimony to the fast progress of the country. We are proud to be partners in this venture which prepares the young generation towards greater paths.”
The Academy will officially launch its activities by holding the first seminar open to the public on the 21st of June. These seminars will focus on physical oil trading, using futures, charting & technical analysis.
