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MENAFN - Khaleej Times - 13/10/2012

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(MENAFN - Khaleej Times) The Dubai Mercantile Exchange (DME) is targeting more trading activity from companies in China and India as it seeks to establish its Oman crude contract as a regional price benchmark, its chief executive officer said.

Christopher Fix, a former BNP Paribas executive who joined the DME in August, plans to meet with officials at the Shanghai Futures Exchange and oil companies on November 15. The DME, majority-owned by CME Group, will also meet with executives and traders at India's Reliance Industries next week in Mumbai, having signed up the operator of the world's largest refining complex as an exchange member last month.

The DME will benefit from having "the largest reserve base on the planet facing the fastest-growing consumer base," Fix said during an interview on Bloomberg Television. "Forty per cent of our crude goes to China, they're the largest single national destination and in that there's definitely great room for expansion," he said in an interview at Bloomberg's offices in London on Thursday.

The exchange views its Oman futures contract, started in 2007, as a competitor and eventual successor to daily oil price quotations for the Middle East and Asia from price reporting agencies such as Platts, an energy-information division of McGraw-Hill Cos.

While some market participants, including the state oil company of Dubai, use the Oman futures as a benchmark for pricing oil sales, the more popular standard for Middle Eastern crude remains Platts' Dubai price assessment.

Platts uses Dubai, Oman and Upper Zakum crude grades in the formation of its published benchmark.

"Getting to 10,000 is the first rung on the ladder," Fix said on Thursday with regard to trading volumes, which are currently about 5,000 to 7,000 lots a day.

The DME has held discussions with six banks based in Saudi Arabia, the UAE and Bahrain to increase the participation of local lenders in futures trading, Fix said.

CME Group, the world's largest futures exchange owner, and Oman Investment Fund, a sovereign wealth fund, increased their stakes in the DME in February to 50 per cent and 29 per cent, respectively.

A unit of Dubai Holding, one of the emirate's three main holding companies, retains nine per cent, while 12 per cent is held by a group of investors including Vitol Group, Royal Dutch Shell, JPMorgan Chase & Co and Goldman Sachs Group.


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