IBANK 6.4.1 Relation to Market Risk

(1) In measuring its market risk, an Islamic banking business firm must include the risk of holding or taking positions in commodities and commodities options (commodities risk).
(2) Commodities means physical or energy products that may be traded. Commodities include precious metals (other than gold and silver), base metals, agricultural products, minerals, oil, gas and electricity.

Guidance
1 If an Islamic banking business firm is exposed to foreign exchange or profit rate risk from funding commodities positions, the firm must include the relevant positions in the measurement of foreign exchange risk and profit rate risk in the trading book — see rules 6.2.2(5) and 6.6.2(4), respectively.
2 Unlike Basel II, silver and gold are treated under Shari'a as foreign exchange positions (rather than as commodity positions). In Basel II, only gold is treated in that way.
(3) If a commodity is to be received or delivered under a binding unilateral promise, the firm must report any foreign currency, equity or profit rate exposure from the other leg of the contract in accordance with Part 6.2, Part 6.5 or Part 6.6, as the case requires.
Derived from QFCRA RM/2015-2 (as from 1st January 2016).