Commodity Murabahah.

Commodity Murabahah is one of the most popular technique used to manage short-term liquidity in the Gulf region especially in Saudi Arabia and United Arab Emirates. Generally, it is based on commodities traded on the London Metal Exchange. Commodity Murabahah is selling the purchased commodities to a third party on Murabahah basis.

There are two main characteristics of commodity murabahah which are must be on the spot and future delivery. In Malaysia, Commodity Murabahah is a national project with the collaboration of Bank Negara Malaysia, Securities Commission, and Bursa Malaysia Berhad. Malaysia only used Crude Palm Oil as the commodity traded for Commodity Murabaha.

Commodity Murabahah used the concept of Tawarruq. Tawarruq is a sale contract whereby a buyer buys an asset from a seller on deferred payment and than sells the asset to a third party on cash with a price lower than the deferred price.

Another thing that you should know about Commodity Murabahah is Bursa Suq al-Sila'. Bursa Suq al-Sila' is a platform where Commodity Murabahah being traded. It is fully electronic web based platform that provides players a place for trading Multi Commodity and Multi Currency. All businesses and activities of Bursa Suq al-Sila' are managed by Bursa Malaysia Islamic Services Sdn. Bhd. Bursa Suq al-Sila' has been launched on 17 August 2009 and the existence of Bursa Suq al-Sila' will strengthening the Malaysia position as an International Islamic Financial Hub.

Actually, there are three participants involve in Commodity Murabahah. First, Commodity Trading Participant. They are financial institutions and Islamic banks such as Bank Islam and al-Rajhi Bank. Second, Commodity Supplying Participant. They are palm oil producers such as Golden Hope Plantation and Sime Darby Plantation. Third, Commodity Executing Participant. They are brokers such as Bursa Malaysia Islamic Services Sdn.Bhd.