Tuesday, January 30, 2007

Deutsche Bank white paper, Ed Balls speaks on Islamic finance & other news

Deutsche Bank produces white paper on the structure of Shari'ah-compliant "swaps"

Deutsche Bank and the consultancy it partly owns, Dar Al Istithmar, produced a white paper on structuring a Shari'ah-compliant "swap". While the paper acknowledges that "the technique DB uses has the same economic result as a total return swap but is structured differently" to ensure Shari'ah-compliance, the move towards transparency demonstrated by the white paper being publicly available is a positive move in the Islamic financial industry and I hope that other IFIs begin to demonstrate commitment to a similar level of transparency. [Press Release] [White Paper - PDF]

Ed Balls speaks on the British gov't role in Islamic financial industry

UK Economic Secretary Ed Balls MP, spoke at the 6th Euromoney Annual Islamic Finance summit in London, where he described the steps already taken, as well as those under development, to attract Shari'ah-compliant funds into the British market. While he addressed the Shari'ah-compliant mortgage market as well as other products designed to assuage funding problems for Muslim-owned businesses, his primary focus was on sukuk issue and secondary market trading in the UK. To date, most sukuk are held until maturity because there is no secondary market, in part because a lack of common standards creates uncertainty about individual sukuk. "The lack of standardisation is hindering liquidity," Ed Balls notes in the prepared text for his speech. "It prevents investors from knowing what risk they are assuming when they invest and increases the costs associated with sukuk". [Press Release] [Text of Speech]

Other News

A conference on various investment topics in the Middle East & North Africa (MENA) region will be held February 20-21, 2007 in Dubai, UAE. There is a website for the Broader MENA Investment Summit and it will be added shortly to the IHI's Conference list.

Merrill Lynch is opening an office at the Dubai International Financial Centre, in part to capture a share of the growing market for Islamic finance.

The government of Kuwait announced the formation of the Jaber Islamic Bank, which will be 24 percent owned by the state and the remaining shares will be privately held.

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