29th May 2008, 06:00 AM
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Join Date: May 2007
Posts: 93
Thanks: 5
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Hey guys I've come up with a good news for the people who look for arbitrage opportunities in crude. There may be opportunity for netting more profits in crude oil futures. Indian companies, with an arm in Dubai, can now keep an eye open for arbitrage between Mumbai-based MCX and Dubai Gold and Commodities Exchange (DGCX), the top exchange in the Middle East.
DGCX on Tuesday launched cash-settled West Texas Intermediate light sweet crude oil and Brent crude oil futures contracts. Both contracts appear to be a runaway hit with local punters as DGCX recorded its highest first-day volumes exceeding $370 million.
Crude is also the most popular contract on MCX. More than 29,000 lots of the June contract were traded today, with the gold June contract a distant second at 18,533 lots. Indian companies that are trading on MCX and have a subsidiary that trades on DGCX can use the slight price difference in crude oil contracts on the two exchanges, which is created largely by the dollar-rupee exchange rate, to make risk-free profits at the end of day.
An Indian broker in Dubai says "Both the exchanges will use the same New York price to settle their contracts. So a company can buy the contract where it is relatively underpriced and sell immediately in the other market. The profit will be booked by either the Indian company or its Dubai subsidiary. Unlike normal speculation, arbitrage is a financial transaction which gives immediate profit without involving any risk" .
Well brokers will surely benefit with it...
Cool isn't it?
Last edited by punnu; 29th May 2008 at 06:05 AM.
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