Dr David Rutledge, chief executive officer of Dubai Metals and Commodities Centre (DMCC), said that DMCC, which has been working on market regulations for a couple of years now, has appointed Emirates Securities and Commodities Authority (ESCA) as an industry market regulator. ESCA is a full member of the International Securities and Commodities Authority.

Fuel exchange has been under evaluation for some time now with various players in the industry to the first energy future contract traded at DGCX. “We had discussions with industry representatives and we welcome any ideas about possible fuel oil futures contract specifications brought to us,” he said.

In fact, DMCC has engaged in extensive consultation process with all sectors of the oil industry in the Middle East and Singapore, including the national oil companies, integrated oil majors, leading refined product traders, investment banks and other organisations. Energy futures contracts issues include range of products; liquidity/volatility; market players and their participation in risk management; and delivery versus cash settlement, he said, adding that physical delivery is the best option. Oil is the most significant commodity in the Middle East region, which has the biggest share in the world’s fuel exports.

DGCX is a joint venture between DMCC, Multi Commodities Exchange of India Ltd (MCX) and Financial Technologies (India) Limited (FTIL). The exchange has been developed to facilitate the trade of gold and commodities. The transactions on the DGCX will take place on a state-of the-art electronic trading platform deployed by FTIL. The new exchange, which has so far received 270 applications, will have two membership categories, including broker and trade and will have HSBC and National Bank of Dubai as clearing banks. Dr Rutledge said while the majority of the applicants were from the AGCC, followed by India and Pakistan, in future some players from the UK, US and Canada are also expected to join the exchange. DMCC currently has some 590 members. The exchange will commence operations with gold and silver, followed by fuel oil. DGCX is also considering steel, cotton and freight futures contracts to be traded at DGCX, which will be based in one of DMCC’s landmark commercial towers. Steel futures contract, if and once launched by DGCX, is going to be the first dollar-denominated steel contract.

The Middle East figures prominently in trade of a number of important commodities. Commodity trade constitutes approximately 15 per cent of Dubai’s GDP. The emirate is the third most important global re-export centre after Hong Kong and Singapore.