Nymex and Dubai Development and Investment Authority explore futures exchange
17 February 2004 | 1162 views | 0
The Dubai Development and Investment Authority (DDIA) and the New York Mercantile Exchange today announced a memorandum of understanding (MOU) to jointly explore the development of the Dubai Mercantile Exchange (DME), the region's first commodity futures exchange.
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.