International Islamic Financial Market (IIFM) has launched the world’s first master agreement in Islamic finance.IIFM’s Master Agreement for Treasury Placement (MATP) can be used by Islamic financial institutions (IFIs) across the world for their over-the-counter (OTC) commodity Murabaha transactions.
“The MATP is a benchmark document and a global first for the Islamic finance industry,” Khalid Hamad, chairman of the IIFM and executive director for banking supervision at the Central Bank of Bahrain (CBB), said in a statement.
The MATP, which has been arrived at after yearlong research by the IIFM secretariat, IFIs and Islamic finance or shariah scholars, comprises a standalone Master Murabaha Agreement, a Master Agency Agreement and a Letter of Understanding.
Murabaha is a particular kind of sale, compliant with shariah, where the seller expressly mentions at what price he bought the commodity before selling it to another person by adding a profit or mark-up which is known to the buyer.
It is one of the most popular modes used by IFIs to promote usury-free transactions and is generally used in asset financing, property, micro finance as well as in import and export of commodities.
With an estimated value of more than $100 billion, commodity Murabaha currently is the most widely used Islamic money market product in the Gulf and other jurisdictions for liquidity management purposes.