The Dubai Mercantile Exchange (DME) has unveiled its plans to launch a new trading hub concept on an electronic trading floor, in an effort to capitalize on local liquidity, draw regional market participants and attract financial institutions from the Middle East and internationally.
Addressing participants at the Cambridge Energy Research Associates Week 2006 conference in Houston, Texas, on Tuesday, DME Limited Chief Executive Officer Gary King explained the DME's vision to meet the growing market need for price discovery of Middle East sour crude oil.
“Against the backdrop of high oil prices, booming regional stock markets and significant liquidity, the DME looks to build upon strong regional confidence and the desire for alternative investment products and risk management,” Mr King stated.
The DME is also hoping to fill the time zone gap between Europe and Asia by providing a new centre for the trading of energy futures, options and other products, enabling the energy industry to help its global customers manage risk more effectively.
“We believe that the Sour Crude Oil Futures contract, which the Exchange seeks to offer, will fulfil these demands as institutions look to diversify into energy and commodities within their investment portfolios. With our unique electronic trading hub concept, international standard regulations and strong demand from our potential customer base, we are confident that the Exchange is poised for success," Mr King added.
Under unique plans, the floor of the DME will be made up of a number of hubs, each of which will consist of four- to six-seat clusters that will be made available to regional and international financial institutions as well as trading companies. Each hub will contain all the necessary hardware for traders to execute their trades electronically and manage their risk from the Exchange floor.
The DME says its plan will help to create an energy trading community on the floor of the Exchange which will in the process generate further liquidity, provide the opportunity for international firms to relocate to the floor of the Exchange, and bring together experienced traders, global banks, local institutions and individuals from around the world.
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