Dubai's DMCC to boost Islamic commodity trade with tie-ups
March 6 (Reuters) - The Dubai Multi Commodities Centre (DMCC) aims to boost activity on its sharia-compliant commodity trading platform by partnering with a global brokerage, while local Islamic lender Noor Bank is set to offer use of the platform to all its corporate clients.
The DMCC wants to increase both the volume and size of transactions on its Islamic platform, which it launched last year.
This week, the DMCC partnered with global brokerage firm BGC Partners, an affiliate of New York-based Cantor Fitzgerald, to promote the platform to a wider international trading community.
"We expect these transactions to be high denominations, as these are mainly related to treasury activities," Paul Boots, director of Tradeflow, which operates both the DMCC's Islamic and its conventional trading platforms, told Reuters.
Noor Bank said expanding its use of the Islamic platform would increase its ability to settle commodity murabaha trades. Such trades are important for the liquidity management of Noor and its customers.
Noor was involved in the DMCC's first Islamic commodity trade last year, a 50 million dirham ($13.6 million) deal, while last month it processed a 2.5 million dirham transaction for a local firm.
"While the individual transaction values may be smaller, the overall volume is expected to be significant due to the number of customers they (Noor) will trade with," Boots said.
The DMCC does not publish trading volumes for its Islamic platform but Boots said it was now handling multiple transactions daily.
The platform allows the trading of warehouse receipts, which represent ownership of commodities stored at warehouses, ensuring that actual trading of physical assets occurs, an important principle in Islamic finance.
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