The US commodities regulator, the Commodity Futures Trading Commission (CFTC), has issued an order of registration to Dubai Mercantile Exchange Limited (DME), the premier energy-focused commodities exchange in the UAE and home to the world’s third crude benchmark.
The decision enables DME’s US-based identified members or other participants to enter orders directly from the country through DME Direct, the exchange’s electronic order entry and trade matching system.
Launched in 2007 with the goal of bringing transparent price discovery to the East of Suez, DME is located within the Dubai International Financial Center (DIFC), a financial free zone designed to promote financial services within the UAE.
The exchange is a joint venture between Dubai Holding, Oman Investment Fund and CME Group. In addition to its core shareholders, global financial institutions have taken equity stakes in DME such as Goldman Sachs, J.P. Morgan and Morgan Stanley.
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The CFTC said that DME made representations that confirmed its solid regulatory status and also satisfied the requirements for registration under the agency’s rules. DME is regulated by the Dubai Financial Services Authority and all trades executed on DME are cleared through and guaranteed by CME Clearing.
The agency noted: “After reviewing the FBOT’s application, the CFTC determined that DME has demonstrated its ability to comply with the requirements of CFTC regulations, including CFTC regulation 48.8, which outlines the conditions of registration.”
It added: “This regulation also permits the CFTC to impose any additional conditions it deems necessary, after appropriate notice and opportunity to respond. DME must also continue to fulfill each of the representations it made in support of its registration application.”
The CFTC previously issued an order permitting DME to offer direct access to US participants. In addition, the agency allowed NYMEX and CFTC-registered FCMs to hold DME customer positions and associated funds in US customer-segregated accounts in connection with NYMEX’s clearing of futures and options on futures contracts traded on the DME.