KUALA LUMPUR, Aug 14 (Bernama) -- Bank Negara Malaysia (BNM)'s Murabahah instrument will use crude palm oil (CPO) as the underlying transaction tool, said chief executive officer, Yusli Mohamed Yusoff.

"We are developing CPO Murabahah (which means profit sharing) product, where it will be used as the underlying instrument for banking product," he said.

Currently, Bursa Malaysia is working with BNM and other parties to deliver the product, he told Bernama on the sideline of the Malaysian Islamic Finance - Issuers and Investors Forum 2006, here today.

The product is expected to be available early next year, he said.

Bursa Malaysia, would provide the platform, which is the derivatives market but the respective banks need to structure the product according to their financial needs and requirements, said head for Offshore and Islamic Capital Market, Group Business Deveopment of Bursa Malaysia, Rusmin Jaafar.

""It will allow them to provide innovative products," she said.

Such commodity based Murabahah transactions are vastly used in Europe and West Asia, she said, but for CPO based, this will be the first.

She said this when asked to comment on BNM governor, Tan Sri Dr Zeti Akhtar Aziz's announcement that the central bank will soon be adding murabahah-based transactions to its already diverse range of policy instruments to manage short-term liquidity in the Malaysian Islamic inter-bank money market.

-- BERNAMA