DGCX trades crude contracts
The Dubai Gold and Commodities Exchange (DGCX) successfully launched its WTI light sweet crude and Brent crude oil futures contracts in late May. Malcolm Wall Morris, CEO of DGCX, says they are the most successful contracts in the exchange’s two and a half year history trading a notional value of $400 million on day one. “We launched the contracts due to customer demand and the desire of regional market participants based in the Middle East to have access to investment tools, and that demand increased due to high volatility,” Wall Morris says. DGCX’s WTI contracts will settle at the Nymex price and Brent contracts will settle at the ICE price. Wall Morris notes that price benchmarks available on ICE and Nymex are now offered to regional investors in Dubai for the first time. “You’re bringing the world’s two premier crude oil benchmarks to the region, which produces the largest amount of crude oil in the world.”
ICE enters CDS market
ICE entered a definitive merger agreement to acquire Creditex Group Inc., which offers execution and processing of credit default swaps (CDS) with markets, including CDS indexes, single-names and standardized tranches, in the United States, Europe and Asia. The transaction is valued at $625 million, $565 million of which is in ICE common stock and $60 million in cash, plus a working capital adjustment to be finalized at closing. The transaction is expected to be accretive in 12 to 18 months from closing.
CCorp/DTCC team up
In May the Clearing Corporation (CCorp), and the Depository Trust & Clearing Corporation (DTCC) entered into a central counterparty services (CCP) agreement for over-the-counter (OTC) derivatives. According to the release the agreement will allow CCorp members to utilize the clearinghouse as the central counterparty (CCP) guarantor for OTC contracts in credit derivatives and continue to use the DTCC Trade Information Warehouse for post trade processing. A third quarter launch is planned.
Bennett faces music
Former Refco CEO and owner Phillip R. Bennett is scheduled for sentencing on June 19 and faces life in prison. In February he pleaded guilty to all 20 counts in his indictment relating to the massive fraud and bankruptcy of the company in October 2005. After Refco lost hundreds of million of dollars starting in the mid-1990s, Bennett made them appear as debt owed by another company he controlled. He and others then concealed the losses through a series of fraudulent round-trip loans. In a letter to the judge, prosecutors have detailed Bennett’s cooperation in uncovering the fraud and returning assets to creditors.
Europeans pressure clearers
The European Union’s Futures and Options Association (FOA) has followed the lead of its U.S.-based counterpart, the Futures Industry Association (FIA), and commissioned a four-month investigation into the growing trend towards vertical clearing and settlement in European futures and options exchanges. The study will be conducted by Oxera, an independent consultancy based in Oxford, and will involve extensive polling of market participants in the wake of moves by both Euronext.Liffe and ICE to clear and settle their own trades - a move that critics say prevents true competition among derivatives exchanges, as mandated under the Markets in Financial Instruments Directive (MiFID).
