Bursa Suq Al-Sila’ Commodity Trading Platform Launched

Malaysias position as an Islamic financial hub was further solidified with the successful commencement of trade on the worlds first, end to end Shariah compliant commodity trading platform. This fully electronic platform, called Bursa Suq Al Sila, is an international

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Malaysias position as an Islamic financial hub was further solidified with the successful commencement of trade on the worlds first, end-to-end Shariah-compliant commodity trading platform.

This fully-electronic platform, called Bursa Suq Al-Sila, is an international commodity platform that is able to facilitate commodity-based Islamic financing and investment transactions under the Shariah principles of Murabahah, Tawarruq and Musawwamah. The launch commodity is Malaysias star product, crude palm oil (CPO).

Formerly known as Commodity Murabahah House, Bursa Suq Al-Sila, which means commodities market in Arabic, is an initiative spearheaded by the Malaysia International Islamic Finance Center (MIFC). The trading platform is operated by Bursa Malaysia via its fully Shariah-compliant wholly-owned subsidiary, Bursa Malaysia Islamic Services Sdn. Bhd.

The trading in Bursa Suq Al-Sila today follows the recent signing of Memorandum of Participation between Bursa Malaysia and over 26 commodity suppliers, financial institutions and trading participants three weeks ago.

The essence of Bursa Suq Al-Sila, which embraces the commodity Murabahah concept, involves one party buying commodity at a certain cost and selling it to a customer at a cost-plus-profit basis. The customer will then pay the amount and the profit to the party on a deferred-payment basis. The customer then sells back the commodity to the commodity market on spot for cash. The trade involves the sale and purchase of real physical assets.

In the initial stage, crude palm oil will be used as the launch commodity. Eventually, this will expand to other Shariah approved commodities covering both soft and hard commodities. Similarly, initial trades in Bursa Suq Al-Sila will be conducted in Ringgit Malaysia-denominated. As Bursa Suq Al-Sila is multi-currency capable, non-RM trades will be introduced in the foreseeable future to provide for international market players. This in turn will provide more choices, access and flexibility for international financial institutions to participate in this market.

It was indeed a good start for Bursa Suq Al-Sila. This innovative platform would not have become a reality if not for the support and participation of industry players across the board. Bursa Suq Al-Sila is indeed one-of-its-kind as it is the worlds first Shariah-compliant commodity trading platform specifically designed to facilitate Islamic finance. It is expected to also enhance liquidity management for Islamic Financial Institutions. Commodity suppliers such as Crude Palm Oil suppliers are also provided with an additional revenue source, says Dato Yusli Mohamed Yusoff, chief executive officer of Bursa Malaysia.

L.D.

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