Bloomberg is reporting that the Secretary General of AAOIFI, Mohamad Nedal Alchaar, said that the body is considering placing rules on Shari'ah scholars to minimize potential conflicts of interest. The rules may limit the number of boards on which a scholar may sit and may also limit the scholar's ability to have investments in those institutions as well. It will be interesting to see whether there is push back, both from scholars, but especially from Islamic financial institutions. My expectation is that the financial institutions--particularly the mid-size ones--will complain (in some cases validly) that the limitation on Shari'ah scholar's participation on multiple boards will harm them because there is a shortage of well known scholars and the multi-national financial institutions will be able to draw the most recognizable scholars. This is probably a valid concern (depending on how low the bar is set as far as the maximum number of boards each scholar can sit on). In the longer-term, it will be beneficial by helping younger scholars become more well recognized, but there will be a cost in the interim where the mid-sized institutions that have thus far been able to have well regarded Shari'ah boards may get priced out of their services by multinational banks. But until there is a firm proposal on the table from AAOIFI, this is just speculation.
- Falling yields on sukuk issued by Malaysia and Indonesia may be the result of their rising currencies against the US dollar which has attracted foreign investors, reports Bloomberg.
- Cagamas issued RM230 million ($72.8 million) in three-year, variable rate commodity murabaha sukuk.
- There is a good article in Arab News about a conference held at the George Washington Law School. The conference featured Frank Vogel, Yusuf DeLorenzo, Umar Moghul, Aamir Rehman and Ibrahim Warde.
- Deutsche Bank's Saudi-joint-venture Deutsche Gulf Finance launched its Islamic mortgage product that offers home financing for up to 30 years, according to a press release.
- A Malaysian expressway company is planning to issue new sukuk to redeem their outstanding sukuk because the tolls will be insufficient to cover the first repayments later this year.
- Indonesia sold 2.855 trillion rupiah($319 million) in 4-year sukuk to the government's Islamic Haj Fund. The planned global sukuk sale was cancelled because the deficit is smaller than expected and the government had trouble attracting investors at yields it would accept. The illiquidity of the sukuk were cited as the reason for higher yields.
- Qatar Islamic Bank (which owns Asian Finance Bank in Malaysia) is reportedly searching for a partner to expand into Indonesia. There have been quite a few Malaysian Islamic banks that recently announced interest in or completed acquisitions to enter the Indonesian market.