Stock exchange in St. Petersburg to focus on Islamic financial guidelines
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The Saint Petersburg International Commodity and Raw Materials Exchange (SPbMTSB) is aiming to become the first major exchange platform in Russia to receive official certification according to Sharia standards. Igor Artemyev, the exchange's president, has set a goal to achieve this certification by the end of 2025. This move will enable operations to be carried out in line with Islamic religious norms.
To make this happen, the exchange will need to undergo a comprehensive audit. An Islamic broker will also be essential to ensure adherence to religious guidelines. Artemyev stated at the "Russia - Islamic World: KazanForum" forum that they plan to create this system and complete it by the end of this year, with an ongoing Sharia review commission monitoring their compliance.
Following Sharia principles in economic relations means avoiding major prohibitions (haram) and, ideally, adhering to Muslim business ethics. As per Sharia standards, interest, speculation, and investments in "non-halal" activities (like alcohol, gambling, pig farming, etc.) are forbidden. In place of traditional banking loans, partnership agreements are typically used, where the investor and businessman share profits and risks. To earn certification, the exchange must demonstrate that every financial instrument is linked to real economic activity. Islamic principles do not support derivative financial instruments like futures and options, especially if they aren't backed by a real commodity.
Now, regions in Russia have already been hosting Islamic banks and financial structures; an experiment on Islamic banking has been running in Tatarstan, Bashkortostan, Chechnya, and Dagestan since 2023. Experts suggest this initiative presents an alternative to the Western financial system amid stringent European sanctions, and it offers a chance to draw substantial investments and diversify the financial market. This could foster the growth of the real sector, from agriculture to industry.
Behnam Gurban-Zade, Sberbank's managing director and head of the Center for Partner Financing and Special Projects, estimates the potential volume of the Islamic finance market in Russia to be around 1 trillion rubles. Notably, Iran, Malaysia, Turkey, and Kazakhstan have shown interest. It's worth mentioning that Kazakhstan was the first CIS country to issue Islamic bonds (sukuk), with the funds used for infrastructure development among other things.
Certifying an exchange like SPbMTSB according to Sharia standards involves several key steps, including Sharia compliance assessments, auditing, product development, establishing a Sharia Supervisory Board (SSB), and obtaining certification from recognized Islamic financial bodies. This process can have significant implications for both the Russian and global Islamic finance markets. The certification could attract Islamic investors, expand the Russian market's reach, diversify financial instruments, contribute to economic growth, and increase the global reach of Islamic finance.
- The Saint Petersburg International Commodity and Raw Materials Exchange's aim to obtain Sharia certification could potentially revolutionize the finance industry, as it would offer business opportunities that align with Islamic religious norms, such as finance, industry, and fintech.
- With the focus on adherence to Sharia principles, SPbMTSB's move towards Islamic finance could lead to the development of new financial instruments, thereby diversifying the business world and attracting investment from Islamic countries like Iran, Malaysia, Turkey, and Kazakhstan, contributing to the expansion of the global Islamic finance market.
