Release: 5514-08
For Release: July 7, 2008

CFTC Amends No-Action Letter Issued to the Dubai Mercantile Exchange

Amended Foreign Access Relief Reflects New Standard

Washington, DC – The Commodity Futures Trading Commission (CFTC or Commission) today announced that Commission staff has amended the May 27, 2007, “no-action relief letter” under which the Dubai Mercantile Exchange (DME) is permitted to make its electronic trading and order matching system available to DME members in the United States.

The new conditions are designed to help the Commission carry out its market surveillance responsibilities and maintain the integrity of prices established on CFTC-regulated exchanges in light of the fact that the DME intends to list for trading a cash-settled contract that settles on the price of a contract traded on a CFTC-regulated exchange. The additional terms and conditions will apply to any U.S. linked contracts that DME elects to trade in the future.

Specifically, the amended letter adds additional terms and conditions that must be satisfied by DME within 120 days in order to maintain the relief granted by the no-action letter. The additional terms and conditions require DME to do the following:

• Adopt equivalent U.S. position limits and accountability levels (including related hedge exemption provisions) for all DME linked contracts;
• Provide the Commission with quarterly reports identifying any trader that had positions in a linked contract above the applicable position limit, whether a hedge exemption had been granted, and if not, whether a disciplinary action had been taken;
• Publish daily trading information that is comparable to the daily trading information published by U.S. exchanges for all linked contracts; and
• Provide the Commission a daily report of large trader positions in each linked contract for all contract months in a form and manner that can be fully integrated into (1) the CFTC’s market surveillance systems – including identification of the beneficial owner of each position, and (2) the Commission’s Commitments of Traders Report – including appropriate categorization of traders and their positions.

Last month, Commission staff amended ICE Futures Europe’s “no-action relief letter” under which it is permitted direct access to U.S. customers. At the time, Commission staff indicated it intends to apply these new foreign access conditions to any future requests for direct foreign access to U.S. customers for contracts that cash settle against those listed on any U.S. exchange. ICE Futures Europe’s and the DME’s existing no-action relief letters have been amended to meet the new foreign access conditions.

Media Contacts
Ianthe Zabel
202-418-5080

R. David Gary
202-418-5085

Last Updated: July 7, 2008