CIMB Islamic, PETRONAS inks deal for Islamic commodity derivatives

This is PETRONAS’ first venture towards Shariah-compliant derivatives.

CIMB Islamic Bank and PETRONAS have signed a Tahawwut Master Agreement (TMA) for Shariah-compliant commodity derivatives.

Under the agreement, PETRONAS will make use of CIMB Islamic’s Shariah-compliant commodity hedging instruments for Islamic Energy Commodity Derivative trades. 

The signing of the TMA marks PETRONAS’ first venture towards Shariah-compliant derivatives, the two companies said in a joint press release.

The TMA is a multiproduct framework agreement drafted by International Swaps Derivatives Association (ISDA) in collaboration with International Islamic Financial Market (IIFM) Association to govern Shariah-compliant derivative transactions. It standardises terms for Islamic hedging products and is expected to help spur the growth of Islamic hedging products in the international market.

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CIMB Islamic and PETRONAS formalised the agreement with a signing ceremony at the PETRONAS Twin Towers.

CIMB was represented by CIMB Islamic CEO Ahmad Shahriman Mohd Shariff; and Chu Kok Wei, co-CEO, Group Wholesale Banking and Group Treasurer of CIMB Group.

PETRONAS were represented by Freida Amat, VP of Treasury; and Nik Mohsain Harjuda Nik Ahmad, head of Group Commodities Exposure Management, Treasury.