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SGX announces first Shariah-compliant gold futures contract

First Published 19th December 2016

Singapore Exchange's Singapore Kilobar Gold Contract has become the world's first Shariah-compliant gold futures.

Natalie Dempster, World Gold Council

Natalie Dempster, World Gold Council

SGX has 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, an 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.

William Chin, Head of Metals and Bulk Commodities at SGX, said, "This unlocks a new investment and risk management option for the rapidly growing Islamic finance industry estimated to hold about $2 trillion in assets."

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 seeks to serve as a transparent and centralised Asian price-discovery platform for the gold market. Globally, about 60% of the precious metal is traded in Asia.