CIMB Islamic Bank Bhd and Petronas have sealed a groundbreaking deal by signing the inaugural Tahawwut Master Agreement (TMA) for Shariah-Compliant Commodity Derivatives.

Petronas becomes the first Malaysian corporation to leverage CIMB Islamic’s Shariah-compliant commodity hedging instruments for Islamic Energy Commodity Derivative trades.

Crafted by the International Swaps Derivatives Association (ISDA) in collaboration with the International Islamic Financial Market (IIFM) Association, the TMA establishes standardised terms for Shariah-compliant derivative transactions.

This development is expected to catalyse the growth of Islamic hedging products globally.

“The TMA provides a global framework for Shariah-compliant derivatives, aligning with Bank Negara Malaysia’s Financial Sector Blueprint.” CIMB Islamic CEO, Ahmad Shahriman Mohd Shariff, said.

Meanwhile, CIMB Group group wholesale banking and group treasurer co-CEOi, underscores the significance of supporting Petronas in utilising Shariah-compliant instruments, particularly given the increasing market demand.

He states, “The TMA sets the stage for Petronas to manage future hedging transactions, and we look forward to fostering more collaborations in this segment.”

Petronas treasury VP, Freida Amat, echoes the sentiment, noting that the TMA reflects Petronas’ dedication to advancing Shariah Compliant Derivatives globally.

She highlights that the utilisation of derivatives under the TMA will enable Petronas to manage exposures in a Shariah-compliant manner, reinforcing its commitment to Shariah finance principles. — TMR