session 1 jamaluddin nor mohamad

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kewangan Islam

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  • 2 Shariah Contracts in Islamic Finance

    Shariah Requirements for

    Commodity

    Value Proposition for CSP

    Bursa Suq Al-Sila

    Overview

    Salient Features

    Transaction Flow

    The Agenda

  • 3

  • Types of Contracts

    Contract of

    Guarantee

    Contract

    of Gift

    Contract of

    Partnership

    Contract of

    Exchange

    Contract

    of Saving

    Kafalah

    Hawalah

    Rahnu

    Takaful

    Hibah

    Qard

    Hasan

    Waqf

    Wasiyah

    Wadiah

    Ijarah

    Jualah

    Bai Salam

    Istina

    Sarf

    Murabahah

    Tawarruq

    Musharakah

    Mudharabah

    Contract of

    Delegate/

    Proxy

    Wakalah

  • Islamic Markets

    COMMODITY MURABAHAH

    -Murabahah is the most globally accepted Shariaah concept used to manage

    short-term liquidity.

    -When a commodity (e.g. cpo, rbd olein) is used as an underlying, it is deemed as

    a Commodity Murabahah transaction

    -Traded on spot basis (up to T+2 business days)

    -Murabahah (cost-plus sale) occurs when a Party A purchases the commodity and

    sells to Party B on a deferred payment terms

    -Party B with ownership right to the commodity can sell the commodity for cash

    -The purchase of commodity on deferred payment basis and selling it for cash is

    made under the Tawarruq contract.

    Tawarruq is a tripatite arrangement whereby a buyer buys an asset from a seller on

    deferred payment and subsequently sells the asset to the third party for cash with a

    price lesser than the deferred price, for the purpose of obtaining cash. This

    transaction is called tawarruq mainly because when the buyer purchases the asset

    on deferred terms, it is not the buyer's interest to utilize or benefit from the

    purchased asset but rather to facilitate him to attain liquidity

  • Bursa Suq Al-Sila Shariah Requirements for Commodity

    Unencumbered Unencumbered

    not tagged to

    any sale at

    point of offer

    Specified

    location

    during offer

    Commodity Commodity

    must be

    owned by

    supplier or

    agent (CSP)

    Defined

    specification

    quantity &

    quality

    Commodity

    must be in

    existence

    6

  • Value Proposition for CSP

    Business as usual for

    suppliers

    Good profiling by

    supporting a national

    effort

    No membership cost

    Delivery cost is at the

    hence better value

    Delivery cost is at the

    expense of purchaser,

    hence better value

    Minimize holding cost of idle

    Commodity inventory

    Extra revenue from

    Commodity inventory

    7

  • Bursa Suq Al-Sila Fee Sharing Structure:

    8

    Type of Fee (per million basis)*

    Trading Fee1 RM 15.00

    * Note: In its equivalent currency value

    1 Paid by CTP for using the platform

    2 Based on RM 15 paid by CTP

    Fee Sharing Structure2 (per million basis)*

    Supplier RM 9.00

    BMIS RM 6.00

  • Islamic Markets

    Income Simulation:

    Example:

    Location Volume (MT) Price (RM)* Total Value (RM Mil)

    Kuantan 2,500 4,000 10.0

    Tawau 2,500 4,000 10.0

    Sandakan 2,500 4,000 10.0

    Lahad Datu 2,500 4,000 10.0

    Total Offer 10,000 4,000 40.0

    Potential income for CSP :

    9

    Offer Amount FeeIncome

    Daily Weekly Monthly Annually

    RM40 million RM9 RM360 RM1,800 RM7,200 RM86,400

    RM400 million RM9 RM3,600 RM18,000 RM72,000 RM864,000

  • 10

  • The worlds first multi-commodity and multi-currency commodity trading

    platform to support murabahah transactions

    A hybrid market offering members a choice of trading electronically through

    a secured web-based system or through traditional voice broking

    Bids and Offers are placed daily and trades are matched electronically

    Commodities are deliverable upon election of the purchaser

    Members are governed by a set of trading rules encompassing best

    market practices and Shariah principles

    Housed in a Shariah-compliant wholly-owned subsidiary of Bursa

    Malaysia called Bursa Malaysia Islamic Services Sdn Bhd (BMIS).

    Bursa Suq Al-SilaOverview

    11

  • Item Details

    Basic Feature Real deliverable market - delivery is by default

    Allows periodical Shariah verification audit

    Underlying E-cert representing ownership of commodity in BSAS

    Contract specification

    Participants Commodity Supplying Participant (CSP)

    Commodity Trading Participant (CTP)

    Taking

    Delivery

    Buyer indicates intention directly to BMIS

    Leaves open position beyond market closing for the day

    Trading

    Session

    Sunday - Friday : 10.00am to 10.30pm

    Friday (1st session) : 10.00am to 12.30pm

    (break) : 12.30pm to 2.30pm

    (2nd session) : 2.30pm to 10.30pm

    Bursa Suq Al-SilaSalient features

    12

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    13

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    14

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3

    1 CSP key in the commodities offered for

    the day

    The stocks will be accumulated in BSAS

    inventory

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    15

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3

    2 Suppliers sell commodity directly to IBA

    on cash, ownership transfers to IBA

    Bursa ensures delivery of commodity to

    IBA if delivery is requested

    IBA credits payment into BMIS account

    (BMIS as settlement agent for Suppliers)

    E-Certificate generated by system

    detailing trade information

  • E-CERTS - A

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    17

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3

    3 IBA sells commodity to its Client/IBB at

    marked-up price, on deferred payment

    basis

    Ownership transfers to Client/IBB as

    evidenced in the eCert

  • E-CERTS E-CERTS - B

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    19

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3

    4 Client/IBB sells CPO to BMIS on cash

    BMIS debit its settlement account for

    Client/IBB

    Ownership transfers to BMIS as

    evidenced in the eCert

  • E-CERTS

    E-CERTS - C

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    21

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3

    5 BMIS offer (to sell) & Suppliers bid (to

    purchase): matching done on random

    basis

    Ownership transfers to Supplier

    Commodity may or may not be reoffered

    into system

  • Commodity

    Payment

    (spot)

    Payment

    (deferred)

    Islamic

    Bank A

    Client /

    Islamic

    Bank B

    21

    4

    Bursa Suq Al-SilaTransaction Flow

    22

    Commodity

    Supplier A

    Commodity

    Supplier B

    Commodity

    Supplier C

    Commodity

    Supplier D

    5

    3