Tadawul Group to buy 32.6% stake in DME

Dubai Tourism

Stock market operator Saudi Tadawul Group will buy a 32.6 percent stake in the parent company of Dubai Mercantile Exchange (DME) for SAR107 million ($28.5 million).

The Saudi bourse owner will become the joint-largest shareholder, alongside CME Group, which owns the New York Mercantile Exchange. Other shareholders are Dubai Holding’s Tatweer Dubai and Oman Investment Authority’s Eagle Commodities Limited.

DME will be rebranded as Gulf Mercantile Exchange to reflect its position as a “regional commodities exchange with global relevance”, Tadawul Group said in a statement.

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DME was founded in 2007 and is headquartered in the Dubai International Financial Centre (DIFC) and regulated by the Dubai Financial Services Authority (DFSA).

The energy-focused commodities exchange is home to the Oman crude oil futures contract (DME Oman contract), which generates the world’s largest amount of physically delivered crude oil. The DME Oman contract serves as the third-most important global crude oil benchmark.

A total of 20 billion barrels of Omani crude oil have traded on DME since its inception in June 2007, while 3 billion barrels have been delivered via its physical delivery mechanism over the same period.

Tadawul said that “no Saudi Arabian crude oil contract will be traded, sold or bought on, or indexed to, nor will Saudi crude be delivered against” DME’s Oman contract.

The Shariah-complaint proceeds will be used to fund DME’s growth.

Following the completion of the transaction, the DME will continue to operate as usual from its headquarters in DIFC and will remain regulated by the DFSA.