The Commodity Futures Trading Commission (CFTC) has announced that it has issued an order allowing the New York Mercantile Exchange (NYMEX) and registered futures commission merchants to hold Dubai Mercantile Exchange (DME) customer positions and associated funds in segregated accounts.
The NYMEX request for this approval relates to the Exchange’s clearing of certain contracts traded on the DME.
For the Commission’s review of the request, NYMEX provided the necessary documents and information. In addition, Commission staff traveled to Dubai to meet with DME, the Dubai Financial Services Authority and other officials.
In a related matter, the Commission’s Division of Market Oversight issued a no-action letter that allows DME to make certain contracts listed on its electronic trading system available in the US. The no-action letter was issued pursuant to the Commission’s 2006 Statement of Policy on direct access to foreign boards of trade, and is subject to a series of terms and conditions.
In addition to providing clearing services to DME, NYMEX will provide DME with technology hosting, trade practice compliance, market surveillance and other services. NYMEX will use the same risk management procedures with the DME contracts as it does with its own contracts.
The order, issued under Section 4d of the Commodity Exchange Act, and the no-action letter are limited to the following contracts: the physically delivered Oman Sour Crude futures contract, the cash-settled West Texas Intermediate-Oman Financial Spread futures contract and the Brent-Oman Financial Spread futures contract.
Last month, the Dubai Financial Services Authority (DFSA) announced the licensing of the Dubai Mercantile Exchange Limited (DME) as an Authorised Market Institution (AMI) in the Dubai International Financial Centre (DIFC). The DFSA also granted the status of Recognised Body to NYMEX to carry on the Financial Service of Operating a Clearing House in the DIFC.
On the 17th of April 2006, NYMEX and Commodity Exchange Inc. (COMEX) were each granted the status of Recognised Bodies within the DIFC to carry out the Financial Service of Operating an Exchange.
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