Malaysia's stock exchange operator aims to double the daily average trades on its murabaha platform from 1 billion ringgit ($313 million) next year as it expands its Islamic finance products in overseas markets, a company official said on October 5.
The operator's Suq Al-Sila' tawarruq platform enables Islamic banks to manage their liquidity through the sale and purchase of commodities, which the industry hopes will address the lack of widely accepted sharia liquidity management tools.
The lack of liquidity tools is seen as one of the key challenges to the emerging Islamic finance industry, with sharia banks handicapped partly due to the limited range of products they can invest in.
Bursa Malaysia will expand its business in Middle Eastern countries such as the United Arab Emirates, Saudi Arabia, Kuwait, Qatar and Jordan and would consider opportunities in North Africa, said Norfadelizan Abdul Rahman, the exchange's Islamic markets' acting global head.
"We might appoint partners who can extend our services further in their local areas," he said in an interview on the sidelines of an Islamic banking conference.
"We're not free from competition and the global market share is still not with us." Apart from crude palm oil and plastic resin, the platform may use coal or downstream palm oil products such as palm olein and stearin early next year as volumes grow, he said. He said part of the platform's growing use was due to Islamic banks seeking to avoid the bai ina or sell and buyback contract which some clerics think does not fully comply with the sharia.
The tawarruq platform, which is also based on the murabaha and musawwamah principles, allows Islamic banks and their clients to buy and sell commodities to raise funding or manage liquidity.