Dubai Mercantile Exchange (DME) has announced that DBS Bank's Singapore office has been approved to issue letters of credit (L/Cs) for trading crude oil on the exchange.

The bank becomes the first Singaporean bank toreceive suchapproval and will be able to issue L/Cs directly from Singapore on behalf of its clients toguarantee deliveries of Oman crude oil through theDME.

Existing providers

In January 2015, Tokyo-headquartered Mizuho Bank joined the handful of banks, including ING Bank, Rabobank and Royal Bank of Scotland (RBS), licensed to issue DME L/Cs directly from Singapore to guarantee deliveries of Oman Blend crude oil (DC World News, 12 January 2015).

In February 2014, RBS was the first bank to win approval to issue L/Cs on DME to guarantee deliveries of Oman Blend crude oil directly from Singapore.

Singaporean advantage

According to DME's managing director, Owain Johnson, the Singaporean bank's regional Asia presence will enable it to "play asignificant role in contributing to higher trade volumes conducted by over 400 commodity players based in Singapore."

DME is a joint venture between Dubai Holding, Oman Investment Fund and CME Group. Global financial institutions and energy trading firms including Goldman Sachs, JPMorgan, Morgan Stanley, Shell, Vitol and Concord Energy also hold equity stakes in the DME.

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