DME sells equity stake to trading firms

The Dubai Mercantile Exchange (DME) has concluded the sale of a 20% equity stake in the exchange to six global financial institutions and energy trading firms.

The exchange’s new shareholding structure will include Goldman Sachs, Morgan Stanley, Vitol, Concord Energy, Casa Energy Trading and Shell. The equity participation between the parties will remain confidential, according to the DME.

Previously, New York Mercantile Exchange (Nymex) and state-backed Dubai company Tatweer held 32.5% in the DME, while the Oman Investment Fund held 30% and floor members 5%.

“The desire of these institutions…to join the exchange as equity holders and strategic partners highlights the remarkable progress made by the DME to date in establishing an internationally recognised futures exchange,” says DME CEO Gary King.

DME chief operating officer Thomas Leaver says the exchange deliberately looked for equity stakeholders with experience in the energy sector. “As this project developed, and we talked to lots of different companies around the world; it was important that they shared our vision, passion and enthusiasm for developing commodities trading,” he says.

According to Leaver, the DME was oversubscribed for its equity offering, and was not concerned about a potential conflict of interest arising for exchange participants owning an equity stake. In fact, the opposite is true.

"It was critical for us to pick those who already traded contracts, supported the exchange from its outset and want to see it grow,” says Leaver.

New equity holder Morgan Stanley says the issue of neutrality is less important than getting the right products and trading rules in place to promote liquidity.

"All successful exchanges have a broad base of participants making decisions to reach the objective of maximum liquidity,” says Goran Trapp, Morgan Stanley’s head of commodities for EMEA. “If anything, by inviting a second set of shareholders from various part of the industry, the DME is broadening its decision making base and thus should ensure decisions around contracts are well anchored."