Singapore Exchange (SGX) has announced that its Singapore Kilobar Gold Contract has become the world’s first Shari’ah-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 to be in compliance with the Shari’ah Standard on Gold as set out by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
“This unlocks a new investment and risk management option for the rapidly growing Islamic finance industry, estimated to hold about $2 trillion (£1.62 trillion) in assets,” William Chin, Head of Metals and Bulk Commodities at SGX, said. “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.”
Natalie Dempster, Managing Director for Central Banks and Public Policy at the World Gold Council, said, “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.”
The Singapore Kilobar Gold Contract aims to be a centralised Asian price-discovery platform for the gold market. Globally, about 60 per cent of the precious metal is traded in Asia.