Dubai Mercantile Exchange (DME) has announced that Singapore-headquartered OCBC Bank has become the latest financial institution to receive approval for issuing letters of credit (L/Cs) for trading on the exchange.

The decision enables OCBC Bank to issue L/Cs directly from Singapore on behalf of its clients to guarantee deliveries of Oman Blend crude oil through the DME.

Asian customers

The agreement means OCBC Bank will be able to provide its Asian customers with reliable access to finance closer to home and make it simpler for them to trade on DME.

The exchange is currently looking to build a diverse roster of top international banks able to issue L/Cs directly from Singapore, so that customers in Asia can use banks close to home to guarantee their crude oil deliveries.

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.

Banks in Singapore

In February 2014, Royal Bank of Scotland became the first bank in Singapore to win approval to issue L/Cs on DME to guarantee deliveries of Oman Blend crude oil directly.

Other banks able to do the same now include DBS Bank, Mizuho Bank, ING Bank and Rabobank (DC World News, 30 June 2015).

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