The New York Mercantile Exchange (NYMEX) will launch "open outcry" trading of oil futures in Dublin from next month.
The board of directors of NYMEX, the largest commodity exchange in the world, approved the opening of a trading floor "as close as possible to November 1st". It will offer open outcry Brent crude oil futures trading.
NYMEX will lease space from Finex, the futures trading operation owned by the New York Board of Trade, which has been trading currency and equity futures from the IFSC since 1994.
NYMEX will make trading permits available to Finex's traders as well as energy traders in New York and London.
A NYMEX spokeswoman said yesterday that it had already received a great deal of interest from traders in London in particular, and it was optimistic it would be able to attract people to trade the Dublin oil contract.
The launch is timed to coincide with the move by rival International Petroleum Exchange (IPE) to close its Brent trading during morning hours. From November 1st, the European energy futures and options exchange will, in the morning, offer electronic trading only.
"Both our oil industry customers and the London oil trading community have been adamant about their desire to maintain open outcry energy trading with the liquidity uniquely provided by that forum," NYMEX president Mr James Newsome said.
Open outcry is a trading method that requires buyers and sellers to cry out bids and offers to each other in a central location or trading pit.
The exchange chose Dublin, rather than the larger London market to launch the contract because of the availability of the technologically advanced Finex facility, the NYMEX spokeswoman said. From a regulatory standpoint, the Irish Financial Services Regulatory Authority (IFSRA) was also willing to work with NYMEX on the move.
The market will be subject to regulation by the US's Commodity Future Trading Commission and IFSRA. The Dublin contract will include the same terms and conditions (including margin requirements) as the Brent crude oil futures contract currently listed for trade on the NYMEX in New York. The only difference is that the contract will be listed 30 consecutive months forward.
