A Regulatory Protocol was today agreed between the Dubai Financial Services Authority (DFSA) and the Commodity Futures Trading Commission (CFTC).
The Protocol was signed by David Knott, Chief Executive of DFSA, and Reuben Jeffrey III, Chairman of the CFTC, at a ceremony in New York.
CFTC is the primary regulator of commodity derivatives trading in the United States with responsibility for some 24 exchanges and clearing houses. It is the home regulator of NYMEX Inc (Nymex) which has announced its intention to establish the Dubai Mercantile Exchange (DME) in a joint venture with Dubai Holding, the commercial arm of the Dubai Government next year. DME is in discussions with the DFSA and is finalising its licence application for lodgment early next year.
Mr. Knott said: “The relationship between DFSA and CFTC will be important to ensure effective and coordinated regulation of the proposed DME. Much of the technical operating and clearing platform of the new exchange will be provided by NYMEX and it is expected that some key activities will be processed through NYMEX’s existing infrastructure in New York. It is therefore essential that DFSA has a strong working Protocol with CFTC to ensure adequate cooperation and information sharing on regulatory matters.
The signing of this Protocol will assist cooperation between the two regulators in both the establishment phase of DME and during its subsequent ongoing supervision.”
Dr Habib Al Mulla, Chairman of DFSA, said: “Establishment of DME within the DIFC next year will be facilitated by this new Protocol between DFSA and CFTC. The commercial partnership between Dubai Holding and NYMEX is now underpinned by a formal relationship between the two regulators. This provides increased confidence that cross border regulatory issues will be effectively coordinated.”
Prior to signing the Protocol with CFTC, Mr. Knott met with senior officials of NYMEX to discuss their planned operations in the DIFC. He then visited the Nymex futures trading floor during which he rang the opening bell to commence the day’s trading on the exchange.
The Dubai Financial Services Authority (DFSA) is a critical component of the Dubai International Financial Centre (DIFC), a new financial centre established to position Dubai as a recognised hub for institutional finance, and the regional gateway for capital and investment to the Middle East. The DFSA is an independent, integrated regulatory authority responsible for the regulation of all financial and ancillary services conducted in or from the Centre, including asset management, banking, securities trading, Islamic finance, re-insurance, and an international financial exchange. The DFSA has been created using principle-based primary legislation modeled closely on that used in London and New York, and the DFSA regulatory regime operates to standards that meet or exceed those applying in the world's major financial centres.
Mr. David Knott is a former Chairman of the Australian Securities and Investment Commission and was Chairman of the Technical Committee of the International Organization of Securities Commissions (IOSCO). He was appointed Chief Executive of the DFSA on 20th March 2005.
The Commodity Futures Trading Commission (CFTC) was created by the United States Congress in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The agency's mandate has been renewed and expanded several times since then, most recently by the Commodity Futures Modernization Act of 2000 (CFMA). Today, the CFTC assures the economic utility of the futures markets by encouraging their competitiveness and efficiency, ensuring their integrity, protecting market participants against manipulation, abusive trading practices, and fraud, and ensuring the financial integrity of the clearing process. Through effective oversight, the CFTC enables the futures markets to serve the important function of providing a means for price discovery and offsetting price risk
Mr. Reuben Jeffrey III was most recently the Special Assistant to the President and Senior Director for International Economic Affairs at the National Security Council. He was sworn in on July 11, 2005, as a Commissioner and the 10th Chairman of the CFTC, having been nominated by President Bush on May 17, 2005, and confirmed by the Senate on June 30, 2005.
