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Dubai: The Dubai Mercantile Exchange (DME) is planning to introduce a gold futures contract and several other commodities derivatives, James E. Newsome, president and chief executive of the New York Mercantile Exchange and board member of DME, told Gulf News on Sunday.
Newsome, currently on a visit to Dubai, said the exchange is studying both gold and steel contracts for potential listing on the DME. "They are both at planning stage. I think we are much closer on the gold contract than the steel contract. Steel has been a difficult commodity for exchanges to capture," he said.
Declining to confirm a time frame for the launch of the gold contract, Newsome said there has been formal communication between the DME and Nymex on the launch of a gold contract on DME.
While the Nymex will provide technology support for the new contract, it will be traded on the DME's existing trading platform. The DME, Newsome said, in its first year of operation, has made significant prog-ress as a new global commodities exchange by creating an international sour crude benchmark.
"If you look at the volume of Oman contracts we have traded since the launch, the volumes are very similar to that of the Brent and the WTI [West Texas Intermediate, a type of crude oil used as benchmark on Nymex] when they were launched. It took WTI three years to reach where it is today. Compared to WTI, in its first year, I think the Oman contract is far ahead in terms of volumes and open interests," he said.
New products
On June 2, DME will launch two new financially settled contracts for Brent and Oman crude oil. The new DME Brent Crude Oil Financial Contract and DME Oman Crude Oil Fin-ancial Contract will be listed for trading on DME Direct, the exchange's electronic trading system. These new contracts will provide traders on the DME with the essential tools for effecting a commonly traded over-the-counter transaction, the spread between sweet and sour crude oil benchmarks.
The DME Brent Crude Oil Financial Contract will be cash-settled against Intercontinental Exchange's (ICE) Brent Crude Futures Contracts, while the DME Oman Crude Oil Financial Contract will be cash-settled against the DME Oman Crude Oil Futures Contract.
The DME also received the Commodities Futures Trading Commission (CFTC) approval on a financially settled DME West Texas Intermediate Contract, which is expected to be launched in the near future. In addition to being cleared at the NYMEX Clearinghouse, the new contracts will also be available for block trading (recently introduced by the DME) as well as Exchange for Physical (EFP) and Exchange for Swap (EFS) trades, using Nymex's ClearPort Clearing.
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