Bank Negara Malaysia (BNM), the Malaysian central bank, has urged banks in Malaysia and Bahrain to work together and use the Bursa Suq Al-Sila’, a purpose-built trading platform, to enable the flow of funds which will enhance the liquidity management framework between both countries.
BNM Deputy Governor Mohamed Razif Abdul Kadir says Bursa Suq Al-Sila’ can provide a viable alternative to the well-functioning of liquidity management in the Islamic financial system.
Bursa Suq Al Sila’ is a specially designed exchange-traded platform to facilitate commodity murabahah transactions. It is the first Internet-based platform in the world with crude palm oil (CPO) as its underlying base commodity.
The commodity trading platform is specifically dedicated to facilitate Islamic liquidity management and financing by Islamic banks and was initiated as a national project by BNM in collaboration with the Securities Commission of Malaysia (SC), local financial market operator Bursa Malaysia Berhad and industry players in support of the Malaysia International Islamic Financial Centre (MIFC) initiative.
“The platform will provide another dimension to the liquidity management infrastructure of the Islamic banking industry, thus providing market players with greater tools to manage their assets and liabilities,” said Mohamed Razif at the signing of a memorandum of understanding (MoU) between Bursa Malaysia and Bahrain Financial Exchange in Bahrain on Sunday.
He said the platform would create more transparent and streamlined commodity transaction practices based on the concept of murabahah or tawarruq. It would also be able to eliminate uncertainty in transactions and could mitigate risks such as legal risk, market risk and counter-party risk.
“As Bursa Suq Al-Sila’ is designed to be a multi-currency platform it can enhance liquidity and risk management capacity of the international Islamic banking community,” he said.
He added that the platform could be harnessed into a cost-effective global platform to develop universally-acceptable Islamic financial products for the financial and capital market.
source : NNN