Bank Negara clarifies Fatwa ruling on forex trading

Source :

KUALA LUMPUR: Bank Negara Malaysia said today that only licensed financial institutions and money changers are allowed to conduct foreign currency trading.

This statement came about after the National Fatwa Council’s ruling on Wednesday that forex trading is forbidden for Muslims.
The Council’s statement on it being permissible among banks and money changers was not prominently mentioned in the media, which created some confusion among the public.
BNM said licensed commercial banks, Islamic banks, investment banks and international Islamic banks are allowed to buy and sell foreign currency in Malaysia, as provided under the Exchange Control Act 1953.
And under the Money Services Business Act 2011, so too are licensed money services business providers or money changers.

Read more: Bank Negara clarifies Fatwa ruling on forex trading – Top News – New Straits Times

First Islamic exchange to be launched in London

The first electronic trading platform allowing Shariah-compliant companies to raise cash will launch in London in May, the venture capital firm behind the project said yesterday.

The Shariah Ummah Securities Information Exchange (Umex) is designed to provide a platform to companies with a capital value of at least £20mn ($31mn) and looking to raise the equivalent of at least 20% of their market value.

Mahesh Jayanarayan, chairman of Halal Industries, which will manage the exchange said it would operate as a Multilateral Trading Facility (MTF).

MTFs are low-cost electronic trading platforms created after the Markets in Financial Instruments Directive (MiFID) opened up exchanges to competition.

It would be the only MTF in Europe so far to help companies raise funds.

“Having been through its early days, it is now time for the Islamic banking and finance sector to strengthen and expand the industry infrastructure to ensure sustainable global operations,” said Sheikh Hussein Hamid Hassan, the scholar heading the exchange’s Shariah panel.

“Umex has lined up 10 Islamic Enterprises and over a 100 Shariah compliant securities to be traded when it goes live,” said Jayanarayan.

He said the exchange planned to bring “over a 100 global Islamic enterprise IPOs within a year from May.”

Shariah Umex will also offer the Islamic version of American and global depository receipts, the Islamic Shariah Depository Receipt (ISDR).

ISDRs represent ownership of a number of shares issued by a Shariah-complaint or Islamic firms traded on a foreign stock exchange.

A senior market practitioner, who declined to be named, said the MTF would need high trading volumes to succeed.

“Is it better for Islamic funds to trade among each other? If not, there is no real advantage to start a specific MTF, because any Islamic fund could buy or sell the same stocks on more liquid venues,” the source said.

The exchange will operate two platforms, one to be launched in May to list small caps, the second to be launched in the third quarter for established Islamic companies with a market in excess of £50mn.

source : the gulftimes