NEWHORIZON

NEWS
NEWHORIZON Jamatul Thani - Sha’ban 1434
DMCC’s Challenge to the
London Metal Exchange
Dubai Multi Commodities Centre
(DMCC) has announced the
inaugural commodity murabaha
transaction on its DMCC Tradeflow
platform. The transaction took
place between Noor Islamic Bank
and Commercial Bank of Dubai,
marking the official launch of
the DMCC Tradeflow Islamic
product portfolio. Throughout
the development of the platform,
DMCC has worked closely with
consultancy firm, Dar Al Shari’ah
Legal & Financial Consultancy
LLC, to ensure that the commodity
murabaha mechanism complies
with Shari’ah principles. In
late 2012 DMCC Tradeflow
received a fatwa certifying that
its Islamic transactions are fully
in accordance with the principles
of Shari’ah. The commodities
available on DMCC Tradeflow
include oil products, foodstuffs
and base metals.
DMCC claim that its platform
offers ‘stronger’ murabaha, thus
responding to the concerns
of some scholars who say that
commodity murabaha is not
sufficiently closely aligned with
of some scholars who say that
commodity murabaha is not
sufficiently closely aligned with real
economic activity, i.e. it is often
a paper transaction in which no
commodities really change hands.
DMCC say that their platform tracks
the ownership of commodities in
such a way that it demonstrates real
trades have taken place. DMCC’s
Tradeflow is potentially an alternative
to the London Metals Exchange,
which has dominated the commodity
murabaha business to date.
The signing of DMCC’s first commodity transaction
Dar Al Istithmar, the Islamic
advisory firm with offices in
London and Dubai has closed. It
was set up in 2004 by Deutsche
Bank, Oxford Islamic Finance Ltd
and Russell Wood Ltd, although
Deutsche Bank subsequently
withdrew. Company personnel
have apparently moved to Khaliji
Islamic, also an advisory company
with offices in London and
Dubai. There has been no official
statement about the closure, but
it is rumoured the management
of the company fell out with
shareholders about its future
direction.
The Central Bank of Bahrain is
apparently drafting new rules for
takaful designed to promote the
growth of the sector by attracting
new operators, particularly
international organisations. It
is reported that as many as 20
Shari’ah scholars have already
signalled their approval for the
proposed changes.
The Kuwait Capital Markets
Authority has issued an advisory
In Brief
statement warning all Shari’ah
compliant financial institutions
in Kuwait to ensure that they
employ the right number of
properly qualified Shari’ah
scholars. The statement,
however, has no legal or
regulatory authority. The
statement is believed to be a
response to concerns that self
regulation by financial institutions
is patchy.
Hamkor Bank is pursuing
plans to begin offering Islamic
banking services in Uzbekistan.
They have apparently concluded
an agreement with Pakistan’s
Al Huda Centre of Islamic
Banking and Economics, which
will provide Hamkor Bank
with consultancy, Shari’ah
advisory services and personnel
development. There is, however,
currently no indication of when
Islamic banking services will
become available in Uzbekistan.
A recent market research study
in Belgium conducted on
behalf of the Association for the
Development of Islamic Finance
(ADEFI) and Islamic Finance
Advisory and Assurance Services
(IFAAS) suggests that more than
70% of Muslims in Belgium
would be likely to take up Islamic
banking services if they were on
offer. Results are based on 500
interviews carried out with both
men and women from a variety of
socio economic groups across the
country.
Bahrain-based Ithmaar Bank, has
received final approval from the
Central Bank of Bahrain and the
Bahrain Ministry of Commerce
and Industry for its merger with
First Leasing Bank. The merger
raises the bank’s capital to $758
million and also enhances its
capital base as well as its capital
adequacy ratios. A recent report,
published by the Bahrain Bourse,
indicates that Ithmaar Bank shares
saw more than 160% growth in
2012, despite a 6.83% decline
in the Bahrain All Share Index
that year. Since Ithmaar Bank’s
reorganisation in April 2010 with
its then wholly-owned subsidiary,
Shamil Bank, and its subsequent
transformation from an investment
bank into an Islamic retail bank,
Ithmaar has focused on developing
its retail and commercial
banking operations.
Following approval from the
Securities and Commodities
Authority, Dubai Islamic
Bank (DIB) published its
formal offer for the shares
in Tamweel PJSC it does
not currently own. (DIB is
the majority shareholder in
Tamweel with 58.2% of the
issued equity.) The offer was
approved by an Extraordinary
General Meeting of DIB
shareholders in early March.
Dr. Adnan Chilwan, Deputy
Chief Executive Officer of
Dubai Islamic Bank, said:
‘This move reflects DIB’s
commitment to supporting
the UAE economy in general
and the resurgent home
finance sector in particular. We
believe this offer is in the best
interests of the shareholders,
customers and stakeholders of
both DIB and Tamweel.’
Qatar’s Masraf Al Rayan
bank has received the approval
of its shareholders to push
ahead with the acquisition
of a strategic share in a
Libyan commercial bank.
8 IIBI
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