CFTC grants relief to NYMEX for DME clearing contracts
The Commodity Futures Trading Commission has issued an order under Section 4d of the Commodity Exchange Act allowing the New York Mercantile Exchange and registered futures commission merchants to hold Dubai Mercantile Exchange customer positions and associated funds in segregated accounts. The Nymex request for this approval relates to the exchange's clearing of certain contracts traded on the DME.
To enable the commission to review the request, Nymex provided the necessary documents and information and commission staff travelled to Dubai to meet with the DME, the Dubai Financial Services Authority and other officials.
In a related matter, the commission's market oversight division has issued a no-action letter that allows the DME to make certain contracts listed on its electronic trading system available in the US. The letter was issued pursuant to the commission's 2006 statement of policy on direct access to foreign boards of trade and is subject to various terms and conditions.
In addition to providing clearing services to the DME, Nymex will provide the Dubai exchange with technology hosting, trade practice compliance, market surveillance and other services, using use the same risk management procedures with the DME contracts as it does with its own.
The Section 4d order and no-action letter are limited to the physically-delivered Oman Sour Crude futures contract, the cash-settled West Texas Intermediate-Oman Financial Spread futures contract and the Brent-Oman Financial Spread futures contract.
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