5th Annual World Islamic Banking Conference Asia Summit (WIBC Asia 2014) Pre-Conference Workshop

Transcription

1 5th Annual World Islamic Banking Conference Asia Summit (WIBC Asia 2014) Pre-Conference Workshop Islamic Liquidity Management and On-Exchange Trades Jamaluddin Nor Mohamad Director, Islamic & Alternative Markets 2 June 2014 What is Bursa Suq Al-Sila (BSAS)? v Bursa Suq Al Sila (BSAS) is an initiative of the Malaysia International Islamic Financial Centre (MIFC) v Supported by Bank Negara, Securities Commission Malaysia and Bursa Malaysia to further promote Malaysia as an international Islamic financial hub v The world s first multi-commodity and multicurrency Shariah compliant platform to support murabahah transactions v A hybrid market offering members a choice of trading electronically through a secured webbased system or through traditional voice broking v Housed in a Shariah-compliant wholly-owned subsidiary of Bursa Malaysia Bursa Malaysia Islamic Services Sdn Bhd (BMIS) 2

2 Murabahah Trading Platform v Members are governed by a set of trading rules encompassing best market practices and Shariah principles v Bids and Offers are placed daily and trades are matched electronically v Operates in a 15-hour 6-day market v Commodities are deliverable upon election of the purchaser v Five (5) approved commodities that can be traded on BSAS - Crude Palm Oil (CPO), Refined, Bleached and Deodorised Palm Olein (RDB Palm Olein), Plastic Resin (Polyethylene), Hardwood Timber and Softwood Timber, and these can be traded in 22 currencies. Financing Sukuk Issuance Deposit Taking v Personal Financing v Credit Card v Housing 3 BSAS Market Features Feature Basic Feature Underlying Participants Min Trade Size Settlement Trading Session Taking Delivery Description Real deliverable market - delivery is by default Seller must own commodity before selling (buy before sell) If position is not squared on the same day, responsible to take delivery Shariah adherence on processes (end-to-end) Generic in design to accommodate multi-currency & multi-commodity E-certificate representing ownership of commodity in BSAS Depository Contract specification each commodity has its own defined specification 3 categories of participant; - Trading Participant (CTP) - Supplying Participant (CSP) - Executing Participant (CEP) Must be approved by BMIS via BMIS Rules for BSAS 1, with an incremental value of 0.01 (in its equivalent currency value) All settlement to CSP will be via BMIS as settlement agent Settlement risks on both side will be taken up by BMIS Trading fee to be settled every month-end Sun Thu : 9.00am 11.15pm (Last bid: 10.20pm) Friday : 1 st Session : 10.00am 12.30pm; Break : 12.30pm 2.30pm 2 nd Session : 2.30pm 11.15pm (Last bid: 10.20pm) Saturday : CLOSE Buyer indicates intention directly to BMIS or leaves open position beyond market closing for the day Delivery date is to be negotiated with CSP and assisted by BMIS 4

3 BSAS: Transactional Flow Example : Islamic Bank A makes placement to Islamic Bank B 1 Islamic Bank A buys commodity from a commodity supplier on spot 2 Islamic Bank A sells commodity to Islamic Bank B on deferred payment basis 3 Islamic Bank B sells the commodity to Bursa Malaysia Islamic Services (BMIS) 4 BMIS sells the commodity back to the market v v Bids and Offers are placed daily and trades are matched electronically Commodities are deliverable upon election of the purchaser 5 BSAS: Transactional Flow & Documentations Islamic Bank A 2 1 Supplier A Supplier B Client / Islamic Bank B 3 4 Supplier C Supplier D Payment (spot) Payment (deferred) 6

4 BSAS: Documentations (E-Cert A - Page 1 & 2) 7 BSAS: Documentations (E-Cert B Page 1) 8

5 BSAS: Documentations (E-Cert C Page 1) 9 BSAS: Delivery & Settlement T T+2 T+3 T+6 T+7 Delivery Schedule: Day T Item Delivery Request by IBA (or its Client/IBB) T+2 Supplier s final day to respond on delivery request to BMIS T+3 Alert to BMIS when the delivery response required from Supplier is absent T+6 Supplier submits the delivery document to BMIS Delivery documents made available for collection by IBA T+7 Delivery process end. BMIS will pay to Supplier 10

6 Shariah Requirements: must be owned by supplier or agent must be in existence Defined specification quantity & quality Specified location during offer Unencumbered not tagged to any sale at point of offer 11 Shariah Verification Audit To ensure: Existence/ Specified Location of the commodity Possession/ Evidence of Ownership Deliverability Shariah-compliant commodity Any exposure of storage to Shariah non-compliant elements Auditees Palm Oil Refinery Palm Fruits 1 Palm Products 12

7 Shariah Requirements: Supplying Participant (CSP) Eligible if that person is in possession of such quantity of the Approved as may be specified by BMIS/ offered to sell through BSAS. CSP must ensure the commodity is placed at the Specified Location before offering. From the time CSP offer to sell the commodity until it is delivered to the identified owner, the commodity must be an unencumbered commodity; and fulfill both quality and quantity requirements. Financial stability CSP is required to submit documents/ information in respect of its financial standing such as Auditor s Certification, Balance Sheet and Profit and Loss account. CSP is to perform functions and obligations as stipulated in BMIS Rules. 13 Shariah Requirements: Trading Participant (CTP) Eligible if that person is either a financial institution licensed under the laws or rules of its domestic supervisory framework; or such other institution as specified by BMIS; and fulfills such other conditions as specified by BMIS. CTP must ensure that all transactions it carries out in relation to the commodity will be solely for the purpose of Shariah compliant financing. CTP is to perform functions and obligations as stipulated in BMIS Rules. 14

8 Thank You DISCLAIMER : Bursa Malaysia and its Group of Companies (the Company) reserve all proprietary rights to the contents of this presentation. Whilst the Company endeavours to ensure that the contents in this presentation are accurate, complete or have been obtained from sources believed by the Company to be accurate and reliable, neither the Company nor the presenter make any warranty, express or implied, nor assume any legal liability or responsibility for the accuracy, completeness or currency of the contents of this presentation. In no event shall the Company be liable for any claim, howsoever arising, out of or in relation to this presentation." Bursa Malaysia 2013