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Sun 11 Feb 2007 12:00 AM

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Eurex sets April trading date for Dubai

The world's largest derivatives exchange and leading European clearing-house is to establish a telecoms hub in Dubai in the first half of this year, the company has announced.

The world's largest derivatives exchange and leading European clearing-house is to establish a telecoms hub in Dubai in the first half of this year, the company has announced.

“We are planning for the access point to go live in April so that we can offer our Middle Eastern investors a direct high-performance connection to the exchange,” said Michael Peters, global head of sales at Eurex.

Eurex has already obtained a no-objection letter from the Securities and Commodities Authority (SCA), the UAE regulator of the Dubai and Abu Dhabi local stock markets, but its application to the Dubai Financial Services Authority (DFSA), needed in order to trade directly from Dubai on the exchange, is still in progress.

“The infrastructure in the DIFC is perfect as they have two telecom providers based there and so we are having very constructive discussions with the DIFC management on this,” Peters said.

Eurex’s current global network provides 395 members in 19 countries with electronic access but Peters added that one of the prime reasons for expanding the network to Dubai was “to bridge the gap in trading hours between Asia and Europe and the feasibility of coming to Dubai was heightened by the fact that assets in the region will, and already are, partly shifting from dollar denominated assets to Euro denominated assets.”

Peters went on to explain that Dubai’s growing status as a financial hub is making it an increasingly important location for foreign financial institutions and that current member firms were keen to expand into Dubai because of the attractive tax-free economic environment.

“We already have four companies, one from London and the remaining three from continental Europe, that are very keen to extend their operations here. We have also had interest from two regional firms who are investigating potential membership and I can confirm that one is based in Dubai and another is active in Dubai,” said Peters.

As derivatives trading is a relatively young market in the Middle East, Peters said that to increase investors and liquidity in this market, Eurex realised that it “needed to lower the entry barrier”.

“We have devised an incentive program that exempts all new participants admitted in 2007 from a license fee to join the exchange and transaction fees of US$3890 a month for the first year of trading, amounting to 46,700 that can be freely traded," he said.