Bahrain Exchange to start trading of Murabahah contracts Feb 7

  • Share via facebook
  • Tweet this
  • Bookmark and Share
STOCK WATCH: The Bahrain Financial Exchange plans to start an online trading platform for Murabahah transactions on February 7 (Getty Images)

STOCK WATCH: The Bahrain Financial Exchange plans to start an online trading platform for Murabahah transactions on February 7 (Getty Images)

The Bahrain Financial Exchange will begin operations next week by introducing a trading platform that will enable banks and companies to buy and sell assets used to back Islamic Murabahah transactions.

The “multi-currency” Murabahah electronic platform will open February 7, initially with five banks, Chief Executive Officer Arshad Khan said in an interview in the capital, Manama today. The exchange, which was scheduled to open in October, plans to start trading Islamic debt next year, he said.

Bahrain, which has the largest number of Islamic banks among the six-member Gulf Cooperation Council, is seeking to attract investors in the $1 trillion Shariah-compliant finance industry with a bourse dedicated to securities that comply with Islam’s principles. Malaysia, the world’s largest market for Islamic bonds, in 2009 introduced an online trading platform for Murabahah transactions.

“Right now there is no automation, everything is manual so of course the efficiency is not there, the cost of transaction is high,” Khan said. “You can do a transaction in two minutes versus two days.”

A Murabahah transaction is a sale and deferred-payment agreement based on an asset in which the cost and profit margin are pre-agreed between a bank and its customer. Transactions in Islamic finance are based on the exchange of assets rather than interest to comply with Shariah principles.

The bourse is seeking to tap as much 30 percent of the global Murabahah market by year-end, Khan said. Daily trading of the contracts is between $8bn and $10bn.

The Bahrain Financial Exchange will in March allow investors to trade futures contracts in currencies and commodities, such as gold and crude oil, Khan said. It plans to start the non-Islamic derivatives exchange with as many as 15 members, he said.

Futures on an Indian stock index and a Middle East and North Africa index will be listed on the exchange, Khan said. The exchange plans to have as many as 30 members trading the Islamic contracts by the end of this year.

 

Related:
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Features & Analysis
Blood on the bourse floor

Blood on the bourse floor

Arabtec’s share price collapse was the catalyst for a huge sell...

Taking stock

Taking stock

Gulf stock markets have seen a dearth of IPOs since the global...

Steering clear of the stock markets

Steering clear of the stock markets

Listing was all the rage three years ago, but IPOs have since...

Most Discussed
  • 24
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held accountable...so thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 23
    Baby NOT on board?

    Some of you cry babies need to get your own personal apartments on the plane ! You cry more then the babies I have seen in my travels. LOL more

    Thursday, 28 August 2014 9:10 AM - Jim
  • 21
    Israel “must be punished” over Gaza, says Dubai police chief

    This high moral ground that Mick is talking abt sound very familiar. May I remind Mick that the US & its British ally alone killed over 1 million innocent... more

    Thursday, 7 August 2014 4:12 PM - Mathew