Global derivatives marketplace CME Group and Oman Investment Fund, a sovereign wealth fund of the Sultanate of Oman, will increase their investments in the Dubai Mercantile Exchange to enable it to further grow its business. Oman Investment Fund will increase its holding to 29 percent; a subsidiary of Dubai Holding will retain 9 percent; and 12 percent will be held on a non-voting basis by strategic investors, including Vitol, Shell, JP Morgan, Morgan Stanley, Goldman Sachs and Concord Energy.
CME Group, the world’s leading and most diverse derivatives marketplace, and Oman Investment Fund, a sovereign wealth fund of the Sultanate of Oman, today announced that they will increase their investments in the Dubai Mercantile Exchange to enable it to continue growing its business.
As part of the restructuring of the DME’s equity shareholding, a recapitalization arrangement will increase the stake in DME held by CME Group’s NYMEX division from 25 percent to 50 percent. Oman Investment Fund will increase its holding to 29 percent; a subsidiary of Dubai Holding will retain 9 percent; and 12 percent will be held on a non-voting basis by strategic investors, including Vitol, Shell, JP Morgan, Morgan Stanley, Goldman Sachs and Concord Energy.
Bryan Durkin, CME Group Chief Operating Officer and Managing Director, Products and Services, said: “The deepening of our relationship with DME further serves our strategy of providing risk managers and investors with access to key benchmark products via our global distribution networks. By committing CME Group’s resources and know-how to DME’s increasingly well-received product set, participants in the Middle East and Asia will be able to access transparent pricing and risk management products as global energy markets focus ever further eastward.”
Hassan Al Nabhani, Chief Executive Officer of Oman Investment Fund, said: “DME’s development into a prominent venue for price discovery will prove to be of significant strategic and financial value for the oil markets. The exchange continues to attract customers from among the key participants in the global energy industry. Our long-standing partnership with CME Group, the world’s leading derivatives marketplace, is building the platform for the next phase in DME’s development.”
Ahmad Bin Byat, Chief Executive Officer of Dubai Holding, said: “Our partners’ increased investment in the DME is a vote of confidence in the future growth of the exchange. Today’s announcement marks a new phase in the development of the DME and we look forward to building on the real progress which has been made to date.”
Ahmad Sharaf, Chairman of the DME, said: “We welcome the continued commitment of our partners. With liquidity in the flagship Oman crude oil futures contract steadily growing and physical delivery reaching new heights in 2011, this recapitalization positions the DME to enter the next phase of development for existing and future customers seeking to manage price risk for crude oil markets East of Suez.”
To build on the success of the partnership to date, the new arrangement puts a robust plan in place to grow the business and ensure that it continues to deliver value to its customers and investors. With the injection of new funds, the DME will retain its independence while benefiting from technology updates, product development support, technical services and CME Group’s skills and expertise in developing global markets.
In 2011, the DME delivered more than 145 million barrels of crude oil – a year-on-year trading volume growth of 19%. Average Daily Volume (ADV) rose to 3,505 contracts, peaking at 4,427 in July, representing the highest monthly ADV since the DME began trading in 2007. New records in total volume were also set in consecutive months during July and August, the latter seeing 95,440 contracts traded. Physical delivery of the DME Oman contract also grew through 2011, with an average of 12.115 million barrels of crude oil delivered each month and a new monthly record of 15.4 million barrels set in September.
About the CME Group
As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex® electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the world’s leading central counterparty clearing providers, which offers clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort®. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.
About Oman Investment Fund
Oman Investment Fund is a sovereign wealth fund of the Government of Oman. Founded in 2006, the fund focuses on investments in medium and long term projects in the private equity and real estate. The fund is based in Muscat, Oman and has a global investment mandate.
About Dubai Holding
Dubai Holding develops and manages an extensive portfolio of financial and real estate assets throughout the world.
Dubai Holding manages two business groups:
Dubai Holding Commercial Operations Group (DHIG), develops and manages world-class commercial and residential real estate and hospitality investments through four operating units; TECOM Investments, Dubai Property Group, Jumeirah Group and Emirates International Telecommunications.
Dubai Holding Investment Group (DHIG) includes diversified financial services offerings, banking, insurance and private equity. DHIG’s operating units are Dubai Group and Dubai International Capital.
For more information on Dubai Holding, please visit www.dubaiholding.com
About the Dubai Mercantile Exchange
The Dubai Mercantile Exchange Limited (DME) is the premier international energy futures and commodities exchange in the Middle East, providing a financially secure, well-regulated and transparent trading environment. The DME is majority owned by core shareholders CME Group, the Oman Investment Fund (OIF), and Dubai Holding). Global financial institutions and energy trading firms such as Goldman Sachs, J.P. Morgan, Morgan Stanley, Shell, Vitol and Concord Energy have taken equity stakes in the DME, providing the exchange with a resounding vote of confidence by major players in global energy markets.
The exchange has developed and trades the DME Oman Crude Oil Futures Contract, addressing the growing market need for price discovery of sour crude oil destined for East of Suez markets, while simultaneously bridging the time-zone gap between Europe and Asia. Launched in June 2007, DME Oman is the largest physically delivered crude oil futures contract in the world.
The DME is a fully electronic exchange, and its contracts are listed on the CME Globex® platform, the world’s leading electronic trading platform, providing access to the broadest array of futures and options products available on any exchange. The DME is regulated by the Dubai Financial Services Authority (DFSA) and all trades executed on the exchange are cleared through and guaranteed by NYMEX (a member of CME Group), which is regulated by the U.S. Commodity Futures Trading Commission (CFTC) and is a Recognized Body by the DFSA.