Bursa, BFX to collaborate

MANAMA (BAHRAIN): BURSA MALAYSIA BHD [] and Bahrain Financial Exchange (BFX) have inked a memorandum of understanding (MoU) towards developing a commercial agreement between them to provide financial products to Islamic market participants and strengthen bilateral ties between both organisations.

In a joint statement on Jan 24, they said among other things, the MoU would involve a feasibility study to identify products and market channels based on an already completed needs assessment for this market.

Additionally, the MoU also lays the foundation for both exchanges to jointly work on increasing awareness on investment opportunities in the respective Islamic markets as well as assist each other in further developing the Islamic investment framework across multiple geographies.

The signing ceremony was witnessed by Bank Negara Malaysia deputy governor Datuk Razif Abdul Kadir, Securities Commission Malaysia managing director Datuk Dr Nik Ramlah Nik Mahmud and Central Bank of Bahrain financial institutions supervision executive director Abdul Rahman Al Baker.

Bursa Malaysia CEO Datuk Yusli Mohamed Yusoff, who signed the MoU on behalf of the Malaysian exchange, said it was aimed at “facilitating cross-border development in the Islamic financial markets, widening market reach, exchanging technological expertise and building a sustainable business model for both exchanges.”

“This is a major step towards consolidation in the Islamic finance world. As Malaysia and the Middle East are the leading centres of Islamic finance, and as both exchanges come together on a single platform, this will add to the strength of this industry.

“This initiative will go a long way in addressing the issues of standardisation, innovation and transparency thus providing a new dimension to the Islamic finance market,” he said.

BFX board director Arshad Khan said: “This initiative is a major development for the Islamic finance market where the collaboration will seek to offer a wider risk management portfolio to global Islamic practitioners.”

“By partnering with Bursa Malaysia we can ensure that the products offered are well defined, robust and fully syariah compliant.”

According to their statement, the total number of Islamic banks, investment and financing companies reached 436 in 2009 with 180 Islamic banks functioning in over 39 countries, while a total of 91 conventional banks across the world have Islamic windows.

Globally, Islamic financial institutions’ assets are estimated to be around US$750 billion (RM2.56 trillion).