Pakistan Mercantile Exchange Limited (PMEX), country’s only multi-commodity futures exchange, has achieved yet another breakthrough by facilitating the country’s first electronic Murabaha transaction, which in essence will pave the way for an Islamic Money Market. Meezan Bank was the Shariah Technical Services Provider for development of this Shariah-compliant trading platform at PMEX.
State Bank of Pakistan of Pakistan (SBP) had earlier allowed banks to conduct transaction on PMEX Sharia Compliant Trading Platform (SCTP) in a limited capacity for the pilot period of three months. The first electronic commodity Murabaha transaction was conducted between Meezan Bank Limited (MEBL) and Dubai Islamic Bank Pakistan Limited (DIBPL) on December 26, 2017.
This is a revolutionary and landmark achievement in the history of Pakistan, which has the potential of bringing Islamic banks at par with their conventional counterparts in terms of managing excess liquidity in a convenient, transparent and Shariah-compliant manner. Islamic Financial Institution’s (IFI’s) can utilize this facility to deploy liquidity to all potential segments, including the government. The Exchange has ensured, in consultation with its Sharia Advisor, Dr. Imran Usmani, that the product is completely Shariah-compliant. The product has been vetted by Sharia Board of State Bank of Pakistan (SBP) Chaired by Respected Justice (R) Muhammad Taqi Usmani, Securities & Exchange Commission of Pakistan (SECP) and Islamic Banking Sub Committee of Pakistan Banks’ Association.
Commenting on the momentous occasion, Managing Director of PMEX, Mr. Ejaz Ali Shah, said, “Today is a historic day as we have embarked upon a journey which will revolutionize the landscape of Pakistan’s Islamic Financial Industry. PMEX’s Sharia Compliant Trading Platform, developed to facilitate Electronic Commodity Murabaha, is a prime example where all stakeholders, i.e. Regulators (both SECP & SBP), Financial Industry Players, Sharia Scholars and Private Sector Institutions have come together, with the Exchange at the core, for this landmark achievement. Over three and a half years of perseverance by the Exchange has translated into an ecosystem which will keep bearing fruits for years to come.”
PMEX Sharia Advisor, Dr. Imran Usmani, said, “This product will not only allow the country’s Islamic Financial Industry to manage their liquidity needs but would also provide opportunity to Banks as well as the Government to meet their financial needs in a Shariah-compliant manner and would enable SBP to offer Shariah-compliant liquidity management solutions to banks”.
Meezan Bank’s President and CEO, Mr. Irfan Siddiqui said “Management of excess liquidity has always been a key challenge for Islamic banks. This product provides an avenue through which not only banks, but also the Government will be able to raise liquidity, with ease, in a completely Shariah-compliant manner”.
The country’s Islamic Financial sector is growing at a rapid pace of over 20% over the last 5 years with an asset & deposit base of over Rs. 2 Trillion & Rs. 1.7 Trillion respectively. PMEX believes that the evolution of this product would not have been possible without the guidance and support of SECP, SBP, PMEX Board, Meezan Bank, Dubai Islamic Bank Pakistan Limited and Hascol Petroleum Limited. The Exchange is confident that, based on the keen interest and enthusiasm of the IFI’s, Commodity Murabaha would strengthen the Islamic financial sector of the country, eventually serving as an industry benchmark and first choice for the IFI’s.