Business | Oil & Gas
DME oil contract faces US hurdle
The Commodity Futures Trading Commission (CFTC) has amended the "no-action relief letter" under which the Dubai Mercantile Exchange (DME) is permitted to make its electronic trading and order matching system available to DME members in the US.
- By Babu Das Augustine, Banking Editor
- Published: 00:07 July 9, 2008
Dubai: The Commodity Futures Trading Commission (CFTC) has amended the "no-action relief letter" under which the Dubai Mercantile Exchange (DME) is permitted to make its electronic trading and order matching system available to DME members in the US.
The details of the amended regulatory requirements are posted on CFTC's website.
The new amendment requires the Dubai futures energy exchange to provide more data about traders and adopt US position limits if it wants access to US customers.
"The new conditions are designed to help the Commission carry out its market surveillance responsibilities and maintain the integrity of prices established on CFTC-regulated exchanges in light of the fact that the DME intends to list for trading a cash-settled contract that settles on the price of a contract traded on a CFTC-regulated exchange," CFTC said in a statement.
The additional terms and conditions will apply to any US linked contracts that DME elects to trade in the future.
Reacting to the CFTC statement, a DME source told Gulf News yesterday that the amendment will not have any immediate impact on DME's business as the bourse is not currently trading the West Texas Intermediate (WTI)-based contracts. "We have obtained the CFTC approval to trade in a WTI cash-settled contract. However, we haven't decided when we would launch it," DME sources said.
The DME currently trades two cash-settled futures contracts for Brent and Oman crude oil in addition to its benchmark DME Oman Crude Oil Futures Contract. The exchange officials had confirmed last month that it will eventually launch a cash settled contract for WTI.
Deadline
The new CFTC amendment adds new terms and conditions that must be satisfied by DME within 120 days in order to maintain the relief granted by the no-action letter.
The latest amendment follows CFTC's decision last month to amend ICE Futures Europe's 'no-action relief letter' under which it is permitted direct access to US customers. At the time, the Commission indicated it intends to apply these new foreign access conditions to any future requests for direct foreign access to US customers for contracts that cash settle against those listed on any US exchange.
Changes: New terms
- Adopt equivalent US position limits and accountability levels (including related hedge exemption provisions) for all DME linked contracts.
- Provide the CFTC withquarterly reports identifying any trader that had positions in a linked contract above the applicable position limit.
- Publish daily trading information that is comparable to the daily trading information published by US exchanges for all linked contracts
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