It offers globally accepted and standardised terms for Islamic hedging products
CIMB Islamic Bank Berhad and Petronas have entered into a groundbreaking agreement by signing the inaugural Tahawwut Master Agreement (TMA) for Shariah-compliant commodity derivatives.
This agreement signified Petronas’ debut in Shariah-compliant derivatives, making it the first Malaysian corporation to utilise CIMB Islamic’s Shariah-compliant commodity hedging instruments for Islamic Energy Commodity Derivative trades.
Drafted by the International Swaps and Derivatives Association (ISDA) in collaboration with the International Islamic Financial Market (IIFM) Association, the TMA establishes a multiproduct framework for Shariah-compliant derivative transactions.
It offers globally accepted and standardised terms for Islamic hedging products, thereby stimulating their international growth.
Adopting this master agreement aligns with Malaysia’s aspirations to become an international marketplace for Islamic finance.
The signing ceremony, held at the Petronas Twin Towers, saw representation from CIMB, including the CEO of CIMB Islamic, Ahmad Shahriman Mohd Shariff and Co-CEO of Group Wholesale Banking and Group Treasurer of CIMB Group, Chu Kok Wei.
Petronas was represented by Vice President of Treasury, Freida Amat and Head of Group Commodities Exposure Management, Treasury, Nik Mohsain Harjuda Nik Ahmad.
Ahmad expressed his gratitude, saying, “CIMB Islamic is proud to partner with Petronas for this landmark Shariah-compliant commodity derivatives arrangement, contributing towards the development of Malaysia’s International Islamic Financial Centre (MIFC), in line with Bank Negara Malaysia’s Financial Sector Blueprint”.
Chu added, “We are pleased to support Petronas, an entity symbolic to Malaysia as the national oil and gas company in meeting their ongoing business requirements.”
“The partnership with Petronas under the TMA is indeed timely, given the robust growth and increasing demand for Shariah-compliant instruments in the market today.”
“The TMA will certainly pave the way for Petronas to manage its future hedging transactions, and we continue to be on the lookout for more synergetic collaborations with other corporate clients to continue invigorating this attractive segment.”
Freida noted that Petronas’ support for the TMA signifies its commitment to advancing Shariah-compliant derivatives globally. She explained that utilising derivatives under the TMA would enable Petronas to manage exposures in a Shariah-compliant manner, reinforcing the company’s support of the Islamic finance industry’s growth.
The collaboration is seen as a strategic move for both entities, with CIMB actively promoting Islamic and sustainable finance and Petronas, a significant player in the oil and gas industry, further supporting Islamic finance through investments in Sukuk and Islamic financing facilities.
The partnership under the TMA is poised to facilitate Petronas’s management of future hedging transactions while contributing to the growth of the Islamic finance sector.
