Liquidity Management for Islamic Banks in Indonesia: The Experience of Komoditi Syariah Jakarta Future Exchange (KS-JFX)

Abstract

The development of Islamic banking in Indonesia has gained popularity since the last two decades that implies high demand on innovative product particularly for liquidity management for Islamic banks. At the same time, the liquidity management is something crucial and urgent to Islamic banking operation. In 2011, Jakarta Future Exchange (JFX) has launched one innovative Islamic money market instrument for Islamic bank as liquidity risk management namely Komoditi Syariah. This product was accommodated by Fatwa DSN-MUI No. 82/DSN-MUI/VIII/2011 to justify the sharīʿah compliance of the product. This paper highlights the contemporary issues of liquidity risk management for Islamic banks in Indonesia. The paper also attempts to elucidate in depth the concept and mechanism of Komoditi Syariah of JFX and lays down several possible sharīʿah issues in the structure. At the end of the chapter, the paper proposes parameters guidelines to comply with sharīʿah, and proposes possible sharī’ah structure that can be taken into consideration by Islamic financial industries for future structure for liquidity management product.