Bursa eyes GCC banks for commodity platform

ABU DHABI: Stock exchange regulator Bursa Malaysia Bhd (1818) expects to attract a few large banks from the Gulf Cooperation Council (GCC) to be members of its syariah-compliant electronic commodity trading platform, Bursa Suq Al-Sila', by this year.

When larger banks in the GCC countries come on board, trading volume through the platform is expected to increase substantially, Bursa chief executive officer Datuk Yusli Mohamed Yusoff said.

"There are a few banks that we are working on, but I can't disclose (their names)," he told the Malaysian media on the sidelines of the Malaysia International Islamic Financial Centre (MIFC) roadshow here on Monday night.

Bursa Suq Al-Sila' offers a platform for Islamic banks to buy and sell commodities to manage their short-term liquidity, as they cannot go to the conventional money market.
Yusli said since Bursa Suq Al-Sila' was launched in August last year, progress has been good where about 90 per cent of Malaysian Islamic banks are using the platform.

There are also some cross-border trades being done by international Islamic banks through the platform.

He said Bursa has a dedicated marketing team that promotes the platform in the GCC region.

"Their work involves convincing syariah committee of the respective banks in GCC on the value of Suq Al-Sila'," he said, adding that the team is making good progress.

He is hoping that some large GCC banks would be roped into the platform by this year.

Yusli said trading on Bursa Suq Al-Sila' is increasing every month.

He added that the trading volume would expand significantly even if a few GCC banks become members of the platform due to their sheer size.

"(But) it depends, these banks may not put all their trade on the platform. Maybe they start with a small amount first, then we can build up the volume."

Yusli also said that Bursa will expand the range of commodities traded on Bursa Suq Al-Sila' within a few months to a year.

He said the in-house team is still working on sourcing the supply of the commodity.

"We are looking at various types of commodities. They may not necessarily originate from Malaysia, as long as their physical presence can be verified as the underlying asset," he said.

It was reported that Bursa was looking at expanding the commodity traded on the platform to include non-precious metals

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