US banks buy into Dubai Mercantile Exchange

The Middle East's first futures exchange sells up to 20% of its equity to a consortium of financial and strategic investors including Goldman Sachs and Morgan Stanley.
The Dubai Mercantile Exchange (DME) has sold up to 20% of its equity to a combination of financial and strategic investors: Goldman Sachs, Morgan Stanley, Vitol, Concord Energy, Casa Energy Trading and a Shell affiliate company.

The DME is the Middle EastÆs first futures exchange, created to provide a benchmark for sour crude (crude oil that contains some impurity, typically sulphur). It is located in a financial free zone in the United Arab Emirates and authorised and regulated by the Dubai Financial Services Authority.

The Dubai-based exchange lists the world's first physically delivered Middle East sour crude oil futures contract, the Oman Crude Oil Futures Contract. In May it launched the DME Brent Crude Oil Financial Contract and the DME Oman Crude Oil Financial Contract. To date, more than 400 million barrels of crude oil have been traded on the DME.

The DME is a joint venture between the New York Mercantile Exchange (Nymex), Tatweer and the Oman Investment Fund. Nymex is the world's largest physical commodity exchange, headquartered in New York City with offices in the US, London and Singapore. It trades light sweet crude oil, brent crude oil, gasoline and over 300 other energy and metals futures and options contracts. Tatweer is a member of Dubai Holding, responsible for a select group of entities developing initiatives to support the development of Dubai. Oman Investment Fund is an investment arm of the government of Oman.

Exact details of the 20% equity sell-down and the consideration were not disclosed by the DME.

ôThe Dubai Mercantile Exchange not only offers strong potential from an investment perspective, but also constitutes a strategic partnership that will develop our footprint in the Middle East,ö says Georges Makhoul, president of Morgan Stanley for the Middle East and North Africa, in a written statement.

Vitol is an independent energy trading group which trades gas, coal, power, non-ferrous metals, derivatives and sugar. It ships 200 million tonnes of oil a year with revenues of over $100 billion. Colorado-headquartered Concord Energy provides natural gas solutions including trading, marketing, transportation, and customer services in the United States and Canada.
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