Commodity Trading

  • Commodity-backed Shariah transactions


Under the principles of Shariah, Islamic banking institutions cannot make money with money. Instead, all financial transactions must be asset-backed, which have made alternatives such as sales-based, partnership-based and leasing-based contracts widely popular. One of the most popular contracts in Islamic banking and finance is the Commodity Murabahah contract based on the Tawarruq arrangement.

Tawarruq is an arrangement that consists of two sale and purchase contracts. The first involves the sale of an asset by a seller to a purchaser on a deferred basis. Subsequently, the purchaser of the first sale will sell the same asset to a third party on a cash and spot basis.

At UOB, commodities make up the underlying asset of the contract by which the Bank will buy and sell a commodity to create a financial obligation between the Bank and the customer.

For the purpose of completing the Commodity Murabahah transaction, UOBM have selected established brokers to ensure the transaction meets the strict requirements of Shariah.

UOB’s list of approved commodity brokers

  • Primary: Bursa Malaysia – Bursa Suq Al-Sila'

    Bursa Suq Al-Sila'

  • Secondary: AbleAce Raakin Sdn. Bhd.

    AbleAce Raakin

UOB’s list of approved commodities

UOBM uses Crude Palm Oil (CPO) as the main commodity in the Commodity Murabahah contract as the commodity is easily available in the local market.  UOBM will act as the agent to transact the trading of commodities on the customer’s behalf, providing customers with peace of mind while ensuring Shariah compliance.

Disclaimer: The Bank may adopt different commodities from time to time depending on the market situation and the Bank’s strategic direction.