Islamic electronic trading platform on organized exchange

Abstract

Today Islamic finance industry is under severe criticism, particularly, concerning liquidity management practices of treasury departments. Since cash lending is not possible under Islamic Shari'ah, Islamic banks tend to use securitized asset related schemes which are by no means neither acceptable under Islamic finance jurisprudence nor compliant with Maqasiq Al-Shari'ah. Maqasid Al-Shariah oversees economic activities which produce wealth and prosperity for all members of society to empower any member with certain level of belongings to bestow freedom while condemning inequality. Under this wider aim of Maqasid Al-Shari'ah, this paper presents alternative state-of-art Shari'ah compliant products, which is used in international trade finance, to be migrated to electronic trading platform under organized exchange in pursuit of replacing controversial liquidity management products. Besides, this paper introduces Islamic Commodity Future Contract, derived from asset backed Murabaha, with physical delivery as an alternative liquidity management tool for Islamic FIs and hedging tool for companies.

Keywords

• Islamic finance
• Islamic exchange
• Islamic treasury practices
• Islamic trade finance
• Liquidity management
• Islamic Commodity Future Contract