The DME is intended to strengthen Dubai's ties with the international finance and commodities trading community, leverage the modern infrastructure which is responsible for making Dubai the region's premiere trading hub, and transfer risk management skills to the region.
Mohammed Al Gergawi, chairman of the Board of DDIA, said, "Trading has always been at the heart of the Arab world and is a key driver behind the Dubai Mercantile Exchange. Every major trading hub worldwide has developed a commodity exchange except for the Middle East, which is home to 65% of the world's crude oil and 40% of the world's natural gas reserves." Vincent Viola, chairman of the New York Mercantile Exchange, said, "The Exchange is proud to be associated with this effort to bring risk management and greater market efficiency to this critical region. We envision the DME as the gateway between the world's energy and commodities market and the resource-rich Middle East. Combining our market expertise and history of innovations with Dubai's state-of-the-art infrastructure, pro-business environment, and diversified base of talent and resources will no doubt result in a marketplace that attracts a myriad of regional and international commodity trade houses clearing firms, brokers, oil and gas companies, and financial institutions.
The DME is expected to be structured as a traditional exchange with a trading floor and clearing house. The project envisions the establishment of a training institution where the region's youth can learn to operate successfully in the modern derivatives environment. In addition, top United Arab Emirates candidates will have the opportunity to train through internships on the trading floor of the New York exchange.
The Joint study will focus on the creation of new and differentiated products, primarily revolving around commodities such as crude oil, natural gas, electricity, aluminum, and precious metals.
New York Mercantile Exchange
The New York Mercantile Exchange, Inc., is the world's largest physical commodity futures exchange and the pre-eminent trading forum for energy and precious metals. The Exchange has stood for market integrity and price transparency throughout its 132-year history. Transactions executed on the Exchange avoid the risk of counterparty default because the Exchange clearinghouse acts as the counterparty to every trade. Trading is conducted through two divisions, the NYMEX Division, home to the energy, platinum, and palladium markets; and the COMEX Division, on which all other metals trade. The Exchange pioneered the development of energy futures and options contracts more than 25 years ago as means of bringing price transparency and risk management to this vital market.
Dubai Development and Investment Authority
The Dubai Development and Investment Authority is a Government Authority entrusted with catalyzing the growth and development of Dubai's economy by attracting corporate and private investors to the UAE and by facilitating the growth of leading local businesses and encouraging local entrepreneurs. To meet these goals DDIA is tasked with developing strategies to attract inward private sector investment into Dubai, mobilizing domestic capital resources for growth and innovation, marketing the business benefits of Dubai to leading global companies and helping leading local companies to develop additional added-value services for their businesses.
