The commodity broker plays a vital role in supporting the Islamic finance industry, but we rarely hear their side of the story despite their tireless work facilitating trades and enabling liquidity management for financial institutions. So to begin with, what position do these platforms really occupy — and why are they so important? Well, first things first: their fundamental role is to facilitate trade. The commodity Murabahah contract, despite its controversy, still forms the basis of the vast majority of deposit, loan and swaps products within the Islamic financial market. As such, the brokers and platform providers who facilitate these contracts play a vital role in the smooth functioning and sustained growth of these markets and products.
“Murabahah platforms enable market participants to trade Shariah compliant assets in sufficient volumes, at very short notice, and in as efficient a manner as possible, in order to satisfy a global market demand for commodity Murabahah-based products, which we believe, on a conservative estimate, is in excess of US$15 billion per day,” commented Stephen Openshaw, the director of Islamic products for UK-based Eiger Trading Advisors, speaking to IFN. “Commodity platforms and brokers can therefore be seen as liquidity providers to the Islamic financial markets — the oil that greases the cogs of the machine — without which, that machine ceases to function!”