"Islamic financial institutions are using commodities which are traded on the London Metal Exchange (LME) currently," said its chief executive Datuk Yusli Mohamed Yusoff.

"With CMH, we are creating an alternative platform for Islamic banks," he told reporters on the sidelines of a palm and lauric oil conference here yesterday.

Yusli said the local bourse was still in talks with the Chicago Mercantile Exchange (CME), the world’s biggest futures exchange, on potential collaboration.

Meanwhile, Plantation Industries and Commodities Minister Datuk Peter Chin said although commodity-based Murabahah transactions were widely used in Europe and the Middle East, one based on crude palm oil (CPO) would be a first for Malaysia.

"I foresee the relevance of CMH not only for the palm oil industry but also for growing the Malaysian Islamic capital market," he said.

On another note, he said the Malaysian CPO market was on an upswing and prospects for the coming year looked promising despite the economic uncertainties.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange hit RM2,026 on Wednesday from a low of around RM1,400 last November. It fell RM60 to RM1,920 yesterday.

On fertilisers, Chin said the ministry was working towards stabilising the prices by collaborating with exporting countries to ensure long-term supply.

Fertiliser prices have fallen by 40% since November last year.