The primary Murabaha contract will see a floating rate payer buy a commodity from broker 1, and immediately sell the commodity to the fixed rate payer.
In an interest rate swap by comparison, it can be argued that the uncertainty of interim payment amounts is not material to the floating rate payer. What is important is that the floating rate payer agrees to pay an amount on a fixed day and with reference to a fixed reference, i.e.
FIXING THE FLOATING RATE What about if the floating rate payer agreed to make a series of payments of fixed amounts and then would add more if the floating equivalent was higher and would receive a refund if the floating payment due on that date was lower?
In brief, the fixed rate payer buys commodities every three months, sells them to the floating rate payer who onward sells them immediately and pays the fixed rate payer the cost of the commodities plus the fixed rate payers profit on the sale, which is linked to a floating rate formula.
Therefore, if one looks closely at this transaction overall, the floating rate payer will pay interest based on LIBOR which is clearly uncertain.
(6) Strictly speaking, the contract would call for the exchange of the difference between (1 + [pi])H(n) and S(n): the fixed rate payer would pay (1 + [pi])H(n) - S(n) if (1 + [pi])H(n) - S(n) > 0, and the floating rate payer
would pay S(n) - (1 + [pi])H(n) if (1 + [pi]H(n) - S(n) < 0.