DFM to start trading Oman crude oil futures next month

Dubai bourse continues to focus on diversifying its product offerings and attract new investors

Dubai seeks to boost its stock market and attract more listings in an effort to tap into a growing appetite for IPOs in the region. Pawan Singh / The National

The Dubai Financial Market will begin trading Oman crude oil futures next month as the bourse continues to diversify its product offerings and attract new investors.

The trading of Oman crude oil contracts, a benchmark that is used by many Gulf producers to price their oil, will begin on June 1, the DFM said in a statement on Thursday.

“The micro Oman crude oil contract will represent a significant addition to DFM's growing futures market. It enables investors’ seamless access to gain on the increase or decrease of oil prices as well as to diversify their portfolios and access leverage to maximise portfolio size and potential returns,” the DFM said.

"The contracts will be cash-settled and will have a smaller contract size of 100 barrels making them accessible to a large number of investors."

The move by the Dubai bourse comes as the emirate seeks to boost its stock market and attract more listings in an effort to tap into a growing appetite for initial public offerings in the region.

Last year, Dubai revealed plans to list 10 state-owned companies as part of its strategy to increase the size of its capital market and attract foreign investment.

Currently dominated by financial services and real estate companies, the government aims to further diversify the sectors on the DFM. Dubai approved a market maker fund worth Dh2 billion ($544 million) last year to encourage listings from sectors including energy, logistics and retail.

In April, the Dubai Electricity and Water Authority became the first public entity to list on the DFM, raising Dh22.41bn in an oversubscribed share sale.

The Oman crude oil contracts will be supported by three market makers xCube, Al Ramz Capital and BHM Capital, and will be offered by several DFM trading members, including International Securities, BHM Capital Financial Services, Al Ramz Capital, Mena Corp Financial Services, Al Dar Shares and Bonds, SICO Financial Brokerage, EFG Hermes (UAE) and Arqaam Securities, according to the statement.

The initiative, launched in collaboration with Dubai Mercantile Exchange, "underscores the DFM's efforts to implement its growth strategy that focuses on diversifying investment opportunities and financial products, in line with the growing demand from its diversified investor base of more than 900,000 investors”, the bourse said.

The Middle Eastern countries are playing a significant role in the pricing and trading of oil.

Adnoc and a number of its trading and upstream partners unveiled crude futures based on the UAE's premium Murban crude grade.

The futures contracts began trading on the new ICE Futures Abu Dhabi exchange at the Abu Dhabi Global Market last year.