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Dubai Mercantile Exchange says IPO an option

The Dubai Mercantile Exchange is considering an initial public offering as one of its options for future growth, the DME chairman said.

The DME, backed by the New York Mercantile Exchange, launched on June 1 with its debut futures contract in Oman sour crude.

The Dubai exchange is competing for the sour crude futures market with the Atlanta-based IntercontinentalExchange, Nymex's principal competitor.

'An IPO of the DME may be an option for the future,' DME chairman Ahmad Sharaf said.

'However, it is still early days for the exchange and we are focusing on growing the business. At this point, no decision has been made on possible timelines for any potential IPO or, indeed, whether an IPO will actually take place.'

The DME is working to build trading volumes in its Oman futures, as it looks to avoid the fate of several previous failed attempts on other exchanges to launch high-sulphur, or sour crude contracts.

The Oman contract is the latest attempt to provide a futures link to crude supply from the Middle East. The region provides more than 30 per cent of the world's 85 million barrels per day (bpd) crude oil and much of it goes to Asia.

But the contract has yet to attract much volume from Asian refiners, and sees most activity during New York trading hours.

DME chief executive Gary King said he expected volume to pick up next month once traders are more familiar with the exchange's settlement procedure.

The exchange was also working on a jet fuel futures contract for launch before the end of the year and has previously said it is looking at futures contracts outside of the energy sector.

Dubai's Tatweer and the Nymex each own a 32.5 per cent stake in the DME. The Oman government has 30 per cent and the remaining five per cent stake is held by DME floor members.Reuters

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