Arab Today, arab today shariacompliant template for profitrate swap soon
Last Updated : GMT 16:24:37
Arab Today, arab today
Arab Today, arab today

Sharia-compliant template for profit-rate swap soon

Arab Today, arab today

Arab Today, arab today Sharia-compliant template for profit-rate swap soon

Manama - Arabstoday

The International Islamic Financial Market (IIFM) expects to launch a template for Sharia-compliant profit-rate swaps, designed to help in hedging risk in frequent cross-currency transactions, in the first quarter of next year, its chief executive said. Ijlal Alvi said IIFM, a global body which works to standardise Islamic finance products, was close to finalising the template, which will standardise documentation in the use of profit-rate swaps among Islamic institutions.\"That standard documentation for the profit-rate swap product will be available soon. We would generally keep the first quarter for now,\" Alvi said in an interview with Reuters in Bahrain. \"We have tested with some core banks already and got their views on it. Now it\'s really just more about getting the Sharia (approval by Islamic scholars).\" Alvi said, \"There is a need to control risk, such as currency volatility for a sukuk issued in another currency or a venture capital deal in which the balance sheet is another currency. We\'re seeing such a pipeline, for instance, of sukuk in recent days so the need for profit-rate swaps is also coming in.\" Economic effects Profit-rate swaps are intended to achieve the economic effect of interest-rate swaps, through the use of underlying Sharia-compliant undertakings and mark-up sale transactions. Advocates say Islamic financial institutions have long needed the hedging product to deal with mismatches between the fixed-rate profile on some of their assets and variable-rate profile on their liabilities, and vice versa. Sukuk issuance has outpaced the conventional bonds industry in recent months and is expected to remain strong into the first quarter of 2012, as borrowers seek better pricing and alternative funding amid the global debt crisis. Sharia-compliant derivative products have in the past been problematic within the Islamic finance industry. In conventional finance, hedging can be used not only to manage risk but also to gamble or speculate, which is forbidden in Islam. Last year IIFM launched a broader Islamic derivatives contract template, known as the Tahawwut Master Agreement, to provide Islamic institutions with a simpler format for risk management that has been approved by Sharia scholars. But the document has been slow to catch on in some parts of the industry, where it is viewed by some as unwieldy. Approved by scholars Still, Alvi said the need for hedging products would become increasingly apparent as the nearly $1 trillion Islamic finance industry continued to grow rapidly, and as standardised documentation approved by Sharia scholars became available. He also said his organisation would look to create a standardised wakala agreement in 2012. Wakala is an agency agreement in which one firm accepts funds from another to invest on its behalf in a Sharia-compliant manner. IIFM is putting together a first draft of the document following a consultative meeting with banks, scholars and law firms, and will provide it for wider feedback. \"We are hoping once the wider phase is done, we\'ll cover most issues that come up and are aiming to have a template in 2012,\" Alvi said. The documentation will look to address interbank relationships, including concern over minimising the use of commodity murabaha, he added.

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today shariacompliant template for profitrate swap soon Arab Today, arab today shariacompliant template for profitrate swap soon

 



Arab Today, arab today

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today shariacompliant template for profitrate swap soon Arab Today, arab today shariacompliant template for profitrate swap soon

 



Arab Today, arab today Etiquette expert calls for short visits

GMT 16:21 2017 Monday ,26 June

Etiquette expert calls for short visits
Arab Today, arab today France defies terrorism through tourism

GMT 15:18 2017 Saturday ,20 May

France defies terrorism through tourism
Arab Today, arab today Mai Al-Jeddawi presents décor ideas for Ramadan
View News in Arabic - Business: مصارف
Arab Today, arab today
Arab Today, arab today

GMT 09:49 2017 Tuesday ,02 May

Girl barred from Malaysia chess competition

GMT 08:48 2017 Saturday ,06 May

Climate science: Bad news gets worse

GMT 16:25 2017 Sunday ,04 June

“Suhoor” is basic meal for fasting

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons

GMT 11:09 2017 Sunday ,25 June

HUAWEI P10 the ‘guru’ of portrait shots
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday