Singapore Bullion Market Association

Website Sponsor

Article List

Article List

Advancing Islamic Finance Through Gold

By Shaokai Fan, Director, Central Banks and Public Policy, World Gold Council

Published on March 9, 2017

The launch of the Shari’ah Standard on Gold in December 2016 promises an increase in the diversity of Shari’ah gold-compliant investment products for the $2-trillion Islamic finance market.

The Shari’ah Standard on Gold, the definitive guide to investing in Shari’ah-compliant gold products, was launched by the World Gold Council and the Accounting and Auditing Organization of Islamic Finance Institutions (AAOIFI) on 5 December 2016. Officially known as “AAOIFI Shari’ah Standard No. 57 on Gold and its Trading Controls” the Standard for the first time sets out comprehensive Shari’ah rules for investing in gold.

The arrival of the Standard can potentially bring about profound changes for both Islamic investors and the Islamic finance industry as a whole. Investors will be able to access gold’s unique attributes as a long-term store of value, diversification tool, and risk-mitigating asset, while the latter will see its investible universe expand through the addition of the large and liquid gold market. The launch of the Standard also has the potential to spark an influx of new products, innovation, and ideas. For Southeast Asia, this means a potential boon for gold products aimed at the growing Islamic finance market in this region.

Although gold has a deep and historical connection with Islamic culture, its treatment as an investment product is subject to complex practices. For example, gold must be exchanged immediately, which results in the modern requirement that gold financial products must be exchanged within the same day or trading session1. The complexity of Islamic rules for gold products was a major impediment to the development of gold financial products in Islamic finance, despite an underlying demand for gold by many investors. Creating harmonised and authoritative Shari’ah guidance for gold was therefore imperative to enable greater accessibility to the asset class by Islamic investors.

Recognising this need, the World Gold Council worked with AAOIFI – the leading standard setting body in Islamic finance – to develop a definitive standard for investment into modern gold products that is widely recognised by the Islamic finance community.

The complexity of Islamic rules for gold products was a major impediment to the development of gold financial products in Islamic finance, despite an underlying demand for gold by many investors.

Southeast Asia is a natural home for new Shari’ah-compliant gold products. Malaysia has long been a vanguard in Islamic finance with a robust array of Shari’ah-compliant solutions catering to a wide variety of investors. Indonesia is the world’s most populous Muslim country and the government has prioritised the development of Islamic finance as a financial development policy. Gold has performed better in ringgit and rupiah terms over the past decade than in U.S. dollar terms, reflecting its usefulness as a wealth preservation instrument for investors in the region. The World Gold Council is actively working with several Southeast Asian financial services providers to provide new gold financial products for retail consumers that will comply with the Standard.

Building on the Standard, the Singapore Exchange (SGX) announced that its Singapore Kilobar Gold Contract has become the world’s first Shari’ahcompliant gold futures contract. Designed to be the kilobar benchmark for Asia, 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 SGX Singapore Kilobar Gold Contract is now certified by Amanie Advisors, a leading advisory firm specialising in Islamic finance solutions, to comply with the Standard.

SGX believes that this unlocks a new investment and risk management solution for the rapidly growing Islamic finance industry estimated to hold about $2 trillion in assets Islamic investors now have exposure to, and to source physical gold via the contract, confident that the trading of the contract adheres to Shari’ah rules.

Embedding gold as a Shari’ah-compliant asset class can propel Islamic finance into the next stage of development by not only expanding the size of the investment universe, but the depth as well. The launch of the Shari’ah Standard on Gold marks the beginning of a new relationship between gold financial products and Islamic finance. Gold’s unique characteristics are now more accessible to Islamic investors, while the industry can benefit from the potential innovation sparked by the inclusion of a new asset class. Given the long and rich history of gold in Islamic culture, it is perhaps fitting that this most ancient of elements is now able to lead the future of Islamic finance.

Embedding gold as a Shari’ahcompliant asset class can propel Islamic finance into the next stage of development by not only expanding the size of the investment universe, but the depth as well.

Notes

1   Under the Standard, the exchange of gold for currency must occur within the same day or trading session. The buyer has to take possession of the gold in person or through an agent, either physically or constructively. The gold must be allocated and the record or certificate of allocation must be issued on the day of concluding the contract (T+0). As long as constructive ownership of the gold is passed from seller to buyer within the same day or session, the physical delivery of the gold can be made at a later time.

Shaokai Fan is the Director for Central Banks and Public Policy at the World Gold Council, responsible for advising central banks on gold matters and promoting free and fair gold markets globally. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, where he helped to counsel official sector institutions on the implications of RMB internationalisation and promoted the RMB as a new reserve currency. Shaokai worked previously as an International Economist for the U.S. Treasury Department and also held roles in capital markets and investment banking.

PREV ARTICLE
NEXT ARTICLE
BACK TO INDEX

Singapore Bullion Market Association Secretariat-Lee-Jia-Yi

Lee Jia Yi

OPERATIONS & ADMIN EXECUTIVE
Before joining SBMA, Jia Yi worked as an Admin & Reporting Officer in her previous role. She holds a Diploma in Business & Social Enterprise from Ngee Ann Polytechnic. Jia Yi is responsible for managing and maintaining physical and digital files in SBMA, supporting invoicing processes, reconciling receivables and payables, coordinating meetings and conferences. Additionally, she will provide support to the team and assist the Business Director in managing the Association’s office operations and general administrative activities.

SECRETARIAT SBMA-Emily-Oh

Emily Oh

OPERATIONS & ADMIN EXECUTIVE
Emily Oh is the Operations & Admin Executive, a seasoned professional who values teamwork and effective communication. She is skilled at adapting to new challenges and takes a proactive and resourceful approach to every task. Before joining SBMA, Emily had experience coordinating international travel arrangements and spearheading community initiatives. Her role at SBMA will be providing operational and administrative support for projects and other matters to the team.

SECRETARIAT SBMA Clara-Chang

Clara Chang

MARKETING & COMMUNICATIONS EXECUTIVE
Clara Chang joins SBMA as the Marketing & Communications Executive, enriching the team with her extensive experience in content creation, social media management, and digital marketing. Prior to joining SBMA, Clara held the position of Marketing Executive at her previous job. She holds two bachelor’s degrees from the University at Buffalo, one in International Trade and another in Geographical Information Science. Her core duties will include maintaining the SBMA website, managing the quarterly Crucible newsletter, among other responsibilities.

SBMA Committee-Photo-john-levin

Mr John Levin

Global Metals
TD Securities
John Levin is the Head of Metal Sales & Trading – APAC at the Toronto Dominion Bank’s Singapore office. Prior to this role, he devoted seven years to leading precious metal sales for the ANZ banking group in his home country, Australia. Notably, from 2009 to 2011, John played a significant role on the management committee of the London Bullion Market Association while serving as the Head of Precious Metals Sales for HSBC Global Banking and Markets in the UK.

SBMA Secretariat-Fabian-Lew

Fabian Lew

MARKETING & COMMUNICATIONS OFFICER

Fabian was a Business Development and Marketing Associate before joining SBMA. He graduated from Singapore Management University with a Bachelor’s degree in Economics.

He has joined SBMA since February, 2022.

SBMA-margare-secretariat

Margaret Wong

BUSINESS DIRECTOR

Margaret Wong, Business Director at SBMA (Singapore Bullion Market Association), brought valuable experience from her previous role at the World Gold Council (WGC). Her tenure at WGC provided her with extensive exposure to the gold community in Singapore and the broader region. This background has been instrumental in establishing strong working relationships within the industry.

Margaret’s role at SBMA encompasses a diverse range of responsibilities. She oversees office management, business support processes, finance, and administrative functions essential for the smooth operation of the team and management committee. Additionally, Margaret handles membership matters, member communications, and addresses public inquiries related to SBMA.

One of Margaret’s key responsibilities is coordinating with the Event Management Company for SBMA’s prestigious annual event, the Asia Pacific Precious Metals Conference. This flagship conference plays a crucial role in the industry, making her involvement pivotal in its success.

Described as resourceful and self-motivated, Margaret Wong brings a wealth of skills and experience to her role at SBMA, ensuring efficient operations and effective engagement within the precious metals community in Singapore and beyond.

SBMA-Albert-secretariat

Albert Cheng

Chief Executive Officer

Albert Cheng joined the World Gold Council in March 1993 as a Regional Manager, becoming Managing Director, Far East in 2003. He retired at the end of March 2015 and was subsequently named its Advisor. He has also been an International Advisor to the Shanghai Gold Exchange since 2002.

His marketing career began with Dentsu Young & Rubicam, Hong Kong in the early 80’s. He began gold marketing in July 1985 when he joined the Royal Canadian Mint as a Regional Manager for Southeast Asia.

He was appointed honorary CEO of SBMA in November 2015. He is responsible for the success and strategic development of SBMA, represents the interests of the Association, and is responsible for all the legal and regulatory aspects of the work of the Association. He is the primary contact for regulators and government bodies on bullion market development.

Ms Pawan Nawawattanasub

Ms Pawan Nawawattanasub

CEO
YLG Bullion Singapore Pte Ltd

Pawan is the CEO of YLG Bullion Singapore and founder of YLG Bullion International. She has almost 40 years of experience in the jewellery industry and established YLG in Thailand in 2003. In 2012, she brought YLG to Singapore. She sits on the Board of Directors of the Thailand Gold Traders Association, the Thailand Futures Exchange’s Arbitration Committee, and the Rotary Bangkok committee. She holds a master’s degree in Political Science.

SBMA-Shaokai-Fan

Mr Shaokai Fan

Head of Asia-Pacific (ex China) and Global Head of Central Banks
World Gold Council
Shaokai Fan is the Global Head of Central Banks at the World Gold Council, responsible for advising governments on gold matters, and enhancing the gold market through engagement, dialogue, and thought leadership. He works directly with central banks and sovereign wealth funds on investment considerations. Prior to this position, Shaokai held multiple roles at Standard Chartered Bank, including Director for Asia Strategic Initiatives and Associate-Director for Public Sector coverage. Shaokai holds a Masters of Public Administration from Columbia University and the London School of Economics, and an undergraduate degree in finance and economics from New York University.

SBMA-Committee-Alan-Liew

Mr Alan Liew

Head of Bullion & Commodities Trading
United Overseas Bank Limited
Alan is Head of Bullion and Commodities Trading for Group Trading in Global Markets, United Overseas Bank (UOB). Alan joined UOB and started the bank’s commodities trading business in 2014, previously he spent eight years in Standard Chartered Bank (SCB) trading both precious and base metals. During his tenure at SCB, he obtained the SGE gold trader licence and was part of the pioneering team for the SGE business and the FX quantitative trading team. Prior to trading, he worked for Monetary Authority of Singapore in the Financial Risk Management Division. He holds a BSc (Hon) in Computer Science at National University of Singapore and a MSc in Financial Engineering at Nanyang Technological University.

SBMA-Committee-Nikos

Mr Nikos Kavalis

Managing Director
Metals Focus Singapore Pte Ltd
Nikos Kavalis is a founding partner of Metals Focus. He has over 20 years of experience in precious metals, having previously worked for the Royal Bank of Scotland and GFMS. Since September 2019, Nikos has been based in Singapore, where he also runs the local subsidiary of Metals Focus.

SBMA-Committee-khun nuttapong

Mr Nuttapong Hirunyasiri

CEO
MTS Gold Global Trading Pte Ltd
Nuttapong Hirunyasiri is the CEO of MTS Gold Group, one of Thailand’s top 10 companies and top 3 bullion companies. He started MTS Gold Group’s first overseas office in Singapore and has been expanding the group business internationally. He focuses on product development and innovation for gold investment, with the aim of being a leader in providing the full suite of gold investment services in the ASEAN region.

SBMA Committee-Photo-Raman-Walia

Mr Raman Walia

Executive Director, Head of Commodities Sales – APAC
JP Morgan Chase Bank N.A.

Raman is Executive Director and Head of Commodities Sales, APAC, for J.P. Morgan. He joined JPMorgan in 2008 in New York, moved to Singapore in 2011, and helped expand the precious metals business in the region. Raman has an MBA from Cornell University, and likes to travel in his spare time.

SBMA Committee-Photo-Andrew-Clarke

Mr Andrew Clarke

Head of Brink’s Global Services
Brink’s Global Services Pte Ltd

Andrew Clarke is the Head of BGS (Brink’s Global Services) for Singapore, Indonesia, Malaysia and Brunei. He has held various leadership positions throughout his career in secure logistics and risk management with Brink’s, which started in Hong Kong in 2010. Andrew relocated to Singapore in 2018 to expand the precious metals line of business along with Brink’s portfolio of services and industries.

SBMA Committee-Photo-Kazuya-Naoki

Mr Kazuya Naoki

Head of Metals, Asia
ICBC Standard Bank Plc, Singapore Branch

Kazuya (Kaz) Naoki is the Head of Metals, Asia of ICBC Standard Bank in Singapore and is responsible for the precious & base metals sales and trading in the region. He joined Standard Bank Plc Tokyo Branch in 2008 and was relocated to its Singapore Branch in 2013 whose controlling stake was acquired by the Industrial and Commercial Bank of China in 2015. Prior to joining Standard Bank, Kaz spent 11 years focusing on commodity trading and risk management with Mitsui & Co in Tokyo, Sydney and London. Kaz has been serving on the SBMA Management Committee since 2016.

SBMA Committee-Photo-Vinh-Nguyen

Mr Vinh Nguyen

Head of Precious Metals, Asia
StoneX APAC Pte Ltd

Vinh Nguyen joined StoneX Group in Singapore at the beginning of 2008 and responsible for its APAC precious metals activities since 2019 until now.

SBMA Committee-KL-Yap

Mr KL Yap

General Manager, Singapore Refining Business Unit
Metalor Technologies (Singapore) Pte Ltd
KL YAP is the General Manager of Metalor Technologies (Singapore) Pte Ltd’s Singapore Refining Business Unit. He joined Metalor in 2013, initially in Refining Sales. In 2014, he became Refining Business Unit Manager, leading the development of a new precious metal refinery. KL was Vice Chairman of SBMA from 2017 to 2021, now serving as Chairman. With a degree in business commerce, finance, and marketing, he brings prior experience from refinery and heavy industries.