DMCC Tradeflow launches electronic Commodity Murabaha trading platform

Dubai Multi Commodities Centre (DMCC), a Government of Dubai Authority, today (27 March) announced the inaugural Commodity Murabaha transaction DMCC_Logoon its DMCC Tradeflow platform. The transaction, which used assets from Ducab and ENOC, took place between Noor Islamic Bank and Commercial Bank of Dubai, marking the official launch of the DMCC Tradeflow Islamic product portfolio.


Ahmed Bin Sulayem, Executive Chairman, DMCC , said, “The growth of the global Islamic finance industry, combined with the recent announcement of Sheikh Mohammed Bin Rashid Al MaktoumHH Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai’s vision for the Emirate becoming a global hub for Islamic finance and economy, has further highlighted the need for innovative and relevant Shari’ah-compliant financial infrastructure. DMCC Tradeflow pioneered the use of an electronic central registry of commodity ownership in Dubai and the inaugural Commodity Murabaha transaction using the platform marks an important milestone within the Islamic finance industry, further cementing Dubai’s role as a global commodity trading hub.”

The growing demand for Islamic finance across the world has created a requirement for products and services that support Islamic banks in conducting Shari’ah-compliant business, according to a statement from DMCC. Asset-backed ‘Commodity Murabaha’ transactions are central to driving this demand. Commodity Murabaha enables Islamic banks to manage liquidity by selling physical commodities at an agreed profit over a deferred payment period. After receiving title and possession to the commodities, the bank’s customers can sell the commodities in the open market to realise their monetary value.

Hussain Al Qemzi, Noor-CEOGCEO of Noor Investment Group and CEO of Noor Islamic Bank said, “The opportunity to be part in this pioneering initiative is very much in line with our corporate culture of innovation. The fully electronic mechanism that adheres to Shari’ah principles provides us with the transparency and speed of execution required to better serve our customers.”

John Tuke, DGM, Treasury & ALM from Commercial Bank of Dubai added, “This platform creates a wider range of treasury products available in the market to help stimulate liquidity in the region. It provides a solution to both the conventional and Islamic financial institutions and we are extremely pleased to be taking a lead on this.”

Real commodities, real trade and real Shari’ah compliance are the key foundations that underpin DMCC Tradeflow, said the statement. Islamic banks in the GCC have for some time been seeking a regional solution that allows them to conduct business in their home markets and DMCC Tradeflow has been specifically developed to meet this need.

Throughout the development of the platform, DMCC has worked closely with Dar Al Sharia Legal & Financial Consultancy, it said, to ensure that the Commodity Murabaha mechanism complies with Shari’ah principles. In late 2012 DMCC Tradeflow received a fatwa from Islamic scholar Dr. Hussain Hamid Hassan, Chairman DIB Sharia Board certifying that its Islamic transactions are fully in accordance with the principles of Shari’ah.

Dr Hussain Hamid Hassan, Chairman, Dubai Islamic Bank Sharia Board, commented, “This transaction is the realisation of my dream as a Shari’ah scholar for a fully compliant electronic system. This platform has fulfilled the pressing need for a reliable and real commodity base for conducting Murabaha transactions, and I believe we will see a significant increase in trading activity by Islamic financial institutions from the UAE and abroad as a result.”

The commodities available on DMCC Tradeflow include oil products, foodstuffs and base metals and if required these goods can be inspected easily by Shari’ah scholars, it said, helping to provide comfort and transparency regarding the goods traded.

Tayeb Almulla, Managing Director, Supply, Trading & Processing, ENOC, said, “The launch of the DMCC Tradeflow Murabaha transaction underlines the vision of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, to strengthen the pillars of the Islamic economy in Dubai. The Sharia compliant trading platform will further energise the commodities business in the Emirate by strengthening the confidence of banking and finance institutions. ENOC is honoured to partner in this initiative which sets another milestone for Dubai and will drive our growth, especially by promoting stronger trade with Islamic economies across the world.”

Andrew Shaw, Managing Director, Ducab, said, “This platform provides us with a unique channel to trade our products, as well as enabling us to support the Islamic finance industry in Dubai. As the largest producer of copper wires and cables in the region we are pleased to be involved in this first transaction and look forward to being a part of the continued success of this initiative in the years to come.”

Source: DMCC

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