The Dubai Mercantile Exchange (DME) is a commodity exchange based in

Dubai Dubai (, ; ar, دبي, translit=Dubayy, , ) is the most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 emirates of the United Arab Emirates.The Government and Politics of ...

currently listing its flagship

futures contract In finance, a futures contract (sometimes called a futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset ...

, DME Oman Crude Oil Futures Contract (OQD). Launched in 2007, the DME aims to become the crude oil pricing

benchmark Benchmark may refer to: Business and economics * Benchmarking, evaluating performance within organizations * Benchmark price * Benchmark (crude oil), oil-specific practices Science and technology * Benchmark (surveying), a point of known elevati ...

for the Asian market with its Oman Crude Oil contract, like the

Intercontinental Exchange Intercontinental Exchange, Inc. (ICE) is an American company formed in 2000 that operates global financial exchanges and clearing houses and provides mortgage technology, data and listing services. Listed on the Fortune 500, S&P 500, and Russell ...

’s (ICE) North Sea Brent is to Europe and the New York Mercantile Exchange’s (NYMEX)

West Texas Intermediate West Texas Intermediate (WTI) is a grade or mix of crude oil; the term is also used to refer to the spot price, the futures price, or assessed price for that oil. In colloquial usage, WTI usually refers to the WTI Crude Oil futures contract ...

is to North America. The choice of the OQD contract as a benchmark was due to several important attributes of the crude oil itself and its infrastructure as opposed to the volume of export in comparison with other Middle East crudes. Firstly, the Omani crude oil is not subject to OPEC production quotas and/or cuts, nor is it subject to destination restrictions. Secondly, the geographical location of the export port Mina al Fahal (operated by Petroleum Development Oman - PDO),in Muscat into the Gulf of Oman, is past the Strait of Hormuz. Other reasons such as the increasing long-term production levels and investments, as well as the quality of the crude, helped tip the balance in favor of that crude to be used as a benchmark. The DME is located in the Dubai International Financial Center (DIFC), (a financial free zone in Dubai), and is regulated by the Dubai Financial Services Authority. The US Commodity Futures Trading Commission (CFTC) issued a " No Action Letter" in 2007, allowing US customers to trade DME contracts. The DME has received further regulatory approval in 23 jurisdictions.

Company Evolution

The exchange was initially started in 2005, when Tatweer and

NYMEX The New York Mercantile Exchange (NYMEX) is a commodity futures exchange owned and operated by CME Group of Chicago. NYMEX is located at One North End Avenue in Brookfield Place in the Battery Park City section of Manhattan, New York City ...

signed a

Joint Venture A joint venture (JV) is a business entity created by two or more parties, generally characterized by shared ownership, shared returns and risks, and shared governance. Companies typically pursue joint ventures for one of four reasons: to access ...

Agreement to launch a commodities exchange in the Middle East. The following year, Oman’s Ministry of Oil and Gas (MOG) announced that the Omani crude oil’s official selling price (OSP) exported through PDO would be set according to the DME Oman Crude Oil Futures contract. In the first half of 2007, Oman Investment Fund (OIF) acquired a stake in the DME, which was launched on 1 June of that year. Two major events in 2008 that notably changed the DME’s shareholding structure; several trading firms and international financial institutions, namely Concord Energy,

Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, ...

JPMorgan Chase JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York City and incorporated in Delaware. As of 2022, JPMorgan Chase is the largest bank in the United States, t ...

, Morgan Stanley,

Shell Shell may refer to: Architecture and design * Shell (structure), a thin structure ** Concrete shell, a thin shell of concrete, usually with no interior columns or exterior buttresses ** Thin-shell structure Science Biology * Seashell, a hard ...

and

Vitol Vitol is a Swiss-based multinational energy and commodity trading company that was founded in Rotterdam in 1966 by Henk Viëtor and Jacques Detiger. Though trading, logistics and distribution are at the core of its business, these are complement ...

, became shareholders of the DME, and NYMEX was acquired by the

CME Group CME Group Inc. (Chicago Mercantile Exchange, Chicago Board of Trade, New York Mercantile Exchange, The Commodity Exchange) is an American global markets company. It is the world's largest financial derivatives exchange, and trades in asset clas ...

. The acquisition of NYMEX by the CME Group greatly impacted the DME. Until the DME migration to the electronic trading platform CME

Globex The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an ...

in 2009, DME futures used to be traded on DME Direct, an electronic platform designed by NYMEX specifically for the DME. The switch to one of the leading platforms, CME Globex, in February 2009 has helped make the access to the DME contracts easier for market participants, as all three benchmarks (WTI, Brent and DME Oman) can be traded on the same electronic platform.
Another boost for the DME in 2009 was the announcement by the Dubai Department of Petroleum Affairs (DPA) in switching their pricing formula to the forward public OSP based on the DME contract. That meant that the Dubai crude oil selling price would become:

East of Suez East of Suez is used in British military and political discussions in reference to interests beyond the European theatre, and east of the Suez Canal, and may or may not include the Middle East.

market.

External links

DME website

CME Group website

DFSA Website
Organizations established in 2005 Commodity exchanges in the United Arab Emirates 2005 establishments in the United Arab Emirates Futures exchanges Emirati companies established in 2005 Financial services companies established in 2005

Company Evolution

See also

External links