The Dubai Multi Commodities Centre (DMCC) has hosted the first murabaha transaction on its Tradeflow platform.

Launched in February 2012, DMCC’s commodity trading platform offers a central, online registry of ownership for commodities and other assets in the United Arab Emirates (UAE).

The AED50mn (US$13.6mn) deal, which used assets from copper cable production company Ducab and Emirates National Oil Company (ENOC), took place between Noor Islamic Bank and Commercial Bank of Dubai. By using oil products and copper cables to back the transaction, it becomes the first deal of its kind to be supported by commodities physically located in the UAE.

Ahmed Bin Sulayem, executive chairman of DMCC says: “The global Islamic finance industry, combined with the recent announcement of Sheikh Mohammed Bin Rashid Al Maktoum, UAE vice-president and prime minister and ruler, of Dubai’s vision for the Emirate becoming a global hub for Islamic finance and economy, has further highlighted the need for innovative and relevant shariah-compliant financial infrastructure.”

Throughout the development of the platform, DMCC, Dubai’s government-owned commodities centre, worked closely with shariah advisory and consultancy firm, Dar Al Sharia Legal and Financial Consultancy to ensure the commodity murabaha mechanism complied with shariah principles.

Hussain Hamid Hassan, chairman of the Dubai Islamic Bank Shariah Board, says: “This transaction is the realisation of my dream as a shariah scholar for a fully compliant electronic system. This platform has fulfilled the pressing need for a reliable and real commodity base for conducting murabaha transactions, and I believe we will see a significant increase in trading activity by Islamic financial institutions from the UAE and abroad as a result.”