Bursa Suq Al-Sila

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Bursa Malaysia through its wholly-owned subsidiary, Bursa Malaysia Islamic Services Sdn Bhd has officially launched Bursa Suq Al-Sila’ or commodities market in Arabic on 17 August 2009. It was previously known as Commodity Murabahah House. Bursa Suq Al-Sila’ is another effort to promote Malaysia as an international Islamic financial centre. It will serve the growing demand for Shariah-compliant financing needs and close the gap currently faced by international Islamic financial players. Bursa Suq Al-Sila is the world’s first Shariah-based international commodity platform is fully electronic and facilitates commodity based Islamic financing and investment transactions under the Shariah principles of murabahah, tawarruq and musawwamah.. The platform is the first initiative of its kind in the world encompassing a hybrid market providing participants a choice between participating in the exchange through the traditional voice broking system or the faster automated electronic exchange system which is web-based. In the initial stage, crude palm oil is used as the launch commodity or as underlying asset and this will expand to other Shari’ah approved commodities such as tin, coal and aluminium in the near future. Bursa Suq Al-Sila' is a commodity trading platform specifically dedicated to facilitate Islamic liquidity management and financing by Islamic banks. Initiated as a national project, Bursa Suq Al-Sila' exhibits the collaboration of Bank Negara Malaysia (BNM), the Securities Commission Malaysia (SC), Bursa Malaysia Berhad (Bursa Malaysia) and the industry players in support of the Malaysia International Islamic Financial Centre (MIFC) initiative. It receives close co-operation and strong support of the Ministry of Plantation Industries and Commodities through the Malaysian Palm Oil Board (MPOB), Malaysian Palm Oil Association (MPOA) and Malaysian Palm Oil Council (MPOC). The exchange has 33 registered members, comprising financial institutions, commodity suppliers and financial brokers, according to Bursa's website. As many as 21 types of commodities including crude palm oil, rubber, coal, copper and zinc have been approved by Malaysia's Shariah Advisory Council to trade on the exchange. The fully electronic web based platform provides industry players with an avenue to undertake multi commodity and multi currency trades from all around the world. This pioneering effort cements Malaysia’s strength in both Islamic finance and Crude Palm Oil industry. Bursa Suq Al-Sila' is another innovative offering and a world’s first for Malaysia, further strengthening its position as an international Islamic financial hub. In effect, Bursa Suq Al-Sila' integrates the global Islamic financial and capital markets together with the commodity market. All businesses and activities of Bursa Suq Al-Sila' are managed by Bursa Malaysia Islamic Services Sdn Bhd (BMIS), a wholly-owned subsidiary of Bursa Malaysia which is regulated, transparent and fully Shari’ah compliant. Murabahah is the selling commodities of cost plus the elements of profit. Tawarruq is a sale of an asset to a purchaser on deferred payment with an onward sale by the purchaser to a third party on cash. This is to create financing transactions which involve specific assets, fulfilling the Shariah requirement that all deals must involve real economic activity. When an Islamic bank uses commodity murabahah to give out financing, it will first buy an asset and then sell it to the borrower. The borrower then sells the commodity to a third party using the bank as its agent, and receives payment which secures the financing it had sought. All transactions done via Bursa Suq Al-Sila’ will involve a true sale with a real transfer of ownership and goods which can be delivered. The use of Tawarruq and its role in money markets and risk management is important in further developing the industry. The event also introduced a newly developed regulated Islamic...
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