SGX launches world's first syariah-compliant gold futures contract

SINGAPORE - The Singapore Exchange (SGX) announced on Tuesday (Dec 20) that its Singapore Kilobar Gold Contract has become the world's first syariah-compliant gold futures.

SGX launched the world's first exchange-traded, physically delivered wholesale gold futures in October 2014, in partnership with the World Gold Council and the Singapore Bullion Market Association.

The contract is now certified by Amanie Advisors, a leading advisory firm specialising in Islamic finance solutions, to be in compliance with the Shariah Standard on Gold as set out by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).

Said Mr William Chin, SGX head of metals and bulk commodities: "This unlocks a new investment and risk management option for the rapidly growing Islamic finance industry estimated to hold about US$2 trillion (S$2.9 trillion) in assets. It also strengthens Singapore's position as an international centre for Islamic finance, and builds on our vision to develop a global trading hub for gold."

Said Ms Natalie Dempster, managing director for central banks and public policy at the World Gold Council: "We expect a considerable increase in demand for gold in South-East Asia as a result of the new standard, and this will offer investors a great way of buying kilobars via an exchange."

Mr Albert Cheng, chief executive officer of the Singapore Bullion Market Association, said the syariah-compliant SGX contract will be attractive to new customers in the region, particularly Indonesia and Malaysia and drive innovation in Islamic investment products.

The Singapore Kilobar Gold Contract seeks to serve as a transparent and centralised Asian price-discovery platform for the gold market, said SGX. Globally, about 60 per cent of the precious metal is traded in Asia.