The CMP is becoming increasingly more apparent in the current Islamic finance landscape because it can help provide liquidity in this arena. This is also evident in the sukuk market, as an example, Abu Dhabi National Energy Company PJSC (or TAQA) recently announced that it had sukuk issuance, as part of its RM3.5 billion sukuk program proposed in November 2011. An illustration of TAQAs sukuk commodity Murabahah transition is detailed below; 1. The holders of the proposed sukuk (sukuk holders) and TAQA will enter into a service Agency Agreement, pursuant to which TAQA will be appointed as the agent (Primary Purchasing Agent) of the sukuk holder for the purchase and sale of Shariah compliant commodities ( the commodities). The Primary Purchasing Agent will then enter into a facility agency agreement to appoint the facility agent as the sub-agent (Secondary Purchasing Agent) for the purchase and sale of the commodities under the proposed sukuk. 2. Pursuant to a commodity Murabahah Master Agreement, TAQA (acting as a purchaser for itself) will issue a purchase order (Purchase order) to the Primary Purchasing Agent and Secondary Purchasing Agent. In the purchasing order, the issuer will request the Primary Purchasing Agent and Secondary Purchasing agent to purchase the commodities, and will irrecoverably undertake to purchase the commodities from the sukuk holders via the secondary purchasing agent. 3. Based on the purchase order, the Secondary Purchasing Agent will purchase---on a spot basis---the commodities from the Commodity Vendors through the Bursa commodity market (via a Commodity Trading Participant or CTP) an amount equivalent to the proceeds from the proposed sukuk. 4. TAQA (acting as the issuer) will then issue the proposed sukuk to the sukuk holders, to fund the purchase price of the commodities. The proposed sukuk will evidence, among others, the sukuk holders ownership of the commodities, and subsequently---once the commodities have been sold to TAQA ( as the purchaser for itself) --- the entitlement to receive the Deferred Sale Price( equivalent to the purchase price and a markup profit). 5. Pursuant to the Sale and Purchase Agreement, the secondary purchasing agent will sell the commodities to the issuer at the Deffered Sale Price. 6. Upon completion of such a purchase, TAQA will sell the commodities to Bursa Malaysia Islamic Services Sdn Bhd (through the CTP)- on a spot basis- for an amount equal to the Purchase Price. The CTP Sale Agreement will allow the CTP to directly sell the commodities to Busra Malaysia Islamic Services Sdn Dhd, upon notice by the secondary Purchasing Agent that the sale and purchase agreement has been completed and executed. 7. During the tenure of the proposed sukuk, the issuer will make periodic payments to the sukuk holders. The aggregate of all such payments will be equal to the deferred sale price. On the maturity date of the proposed sukuk, the issuer will pay all amounts outstanding on the deferred sale price to the sukuk holders, upon which the proposed sukuk will be cancelled. Case Study Questions: [2+2+3] a) What is commodity Murabahah? Explain why does the use of commodity Murabahah in Islamic finance remain controversial across jurisdictions. Discuss. What kind of contract is used when establishing an Islamic current account deposit, according to the majority of Muslim jurists? b) Explain the linkage of commodities with sukuk issuance, as you understand it, from the details provided in this case study c) Consider the statement in point 7 above carefully. Will the periodic payments to sukuk holders be uniform and regular, and would sukuk automatically be redeemed by the end of their duration? Give reasons for your answer. d) Since Shariah principles prohibit charging or payment of interest than in what form can investor expect to receive returns on Sukuk? Write down the controversies about sukuk. controversies about sukuk