Hong Kong, U.K., Dubai all want to become the leaders in Islamic finance

Sheikh Yusuf DeLorenzo, the prominent American Shari'ah scholar recently wrote a paper criticizing the recent approval of financial products which have been approved by Shari'ah boards and pay returns that are linked to non-Shari'ah-compliant products. The editors at Dinar Standard, sat down with Sheikh DeLorenzo who provided further comments about the products, as well as presenting his hope that the products will be rejected in the market by investors. The decision, he argues, follow from a focus on a literalistic interpretation and lose focus of the maqasid (purpose, intent) of the Shari'ah. Sheikh DeLorenzo's paper, "The Total Return Swap and the 'Shari'ah Conversion Technology' Stratagem" is available in pdf form.

The leader of Hong Kong Donald Tsang is on a tour of GCC countries, in part to try to attract funds to Hong Kong as it begins to develop a Shari'ah-compliant finance industry.

Standard and Poor's has launched three new Shari'ah-compliant equity indices, large-cap, small cap and U.K.

The U.K. now has an option for money transfer that is Shari'ah-compliant through Lloyd's TSB.

The DIFC wants to be the center of Islamic finance worldwide, while London is making its own try at that position, being the leading Western country in the industry. The International Financial Services London, an organization promoting London's financial services industry worldwide, issued an 8 page report (pdf)on making London a center for Islamic finance.

Interesting notes from the IFSL report:

• "the customer base [for Islamic finance] in Western countries is not necessarily restricted to Moslems: other customers may be attracted by the ethical and environmental basis of Islamic finance"
• Top 5 sectors where sukuk are used: infrastructure (39%), finance (18%), energy (16%), real estate (11%), manufacturing (9%)
• U.S. is fourth in number of Shari'ah-compliant equity funds, trailing Saudi Arabia, Malaysia and the U.K.
• The U.S. is second in the number of Islamic banks among Western countries with 20, trailing the U.K. with 23

HSBC Amanah argues that Shari'ah-compliant insurance (takaful) needs to become more widely available.