A microcosm of the sukuk market

The sukuk market is often characterized as one marketplace with a number of companies tapping it for funding. However, in reality, the sukuk markets around the world are incredibly diverse and there are many local factors which affect issuance and many reasons for companies to decide to issue sukuk. Today, when reviewing the various news around the Islamic finance industry, several companies and government announced plans for sukuk (conditional on favorable market conditions). However, the diversity of the geographical spread and issuer type provide a microcosm of the "sukuk market".

The announcement that received the most attention was not a sukuk announcement at all, but the announcement at the IFSB summit in Luxembourg that the government there had put on hold their plans for a sukuk. In part, the reason why Luxembourg would be interested in a sukuk (although this was not ever announced formally) was to establish the Duchy as a gateway into Europe, primarily for funds, many of which are domiciled in Luxembourg as a way to enter the EU market. Luxembourg has also become more involved in the Islamic finance industry globally, being the only European country that is a member of the IFSB and the central bank governor Yves Mersch was appointed as the Deputy Chairman of the International Islamic Liquidity Management Corporation, which is working on liquidity management products for Islamic financial institutions. The official reason given for the delay was that with tax receipts improving, the government did not need the funds, but this announcement follows the indefinite postponement of a UK sovereign sukuk, which suggests that European governments may be cooling on the idea of being directly involved in the sukuk markets (as issuers).

In contrast, Qatar Islamic Bank and Sharjah Islamic Bank announced plans for sukuk in the remainder of the year. QIB said it planned on the sukuk issuance to reduce debt payments, while Sharjah Islamic Bank said the sukuk was <a href="planned to continue its growth. These two issues represent a different theme than the (perhaps temporarily) waning desire to enter the sukuk market on the part of European sovereigns. In contrast, they are more opportunistic, reflecting renewed confidence in the sukuk market in the stable countries in the GCC. Qatar has remained stable and is taking a lead in aiding the rebels in Libya in their continuing fight against Ghaddafi and has thus far avoided facing widespread protests in other Middle Eastern countries. Sharjah, one of the emirates in the UAE, has also seen stability so far and is likely benefiting from a reduction of the stigma on the UAE in the wake of the Dubai debt crisis in 2009 (which can indirectly be gauged by the fall in the yield on Dubai government sukuk and the upgrade on DP World's sukuk).

There is a new dichotomy in the GCC (in particular the smaller countries on the Persian Gulf) between those like the UAE and Qatar, which have remained stable and largely isolated from the Arab Spring, and those like Bahrain (where Saudi Arabia has sent troops) that are still facing protests. Kuwait, where sukuk issuance has picked up some is still dealing with several investment bank defaults on sukuk and so represents a third group. Despite the protest and violence in Bahrain, that country has not entirely withdrawn from the sukuk market, having recently issued a 5-year ijara sukuk in addition to the short-term ijara and salam sukuk. In addition, within the GCC region, the Islamic Development Bank remains a fairly regular issuer and is reported to be planning US Dollar sukuk (supported by its AAA credit rating).

Elsewhere, the sukuk market continues to move along its previous trajectory. Pakistan's government issued another sukuk to cover a portion of its large budget deficit and to provide an investment for the growing Islamic banking market in the country. This sukuk had the added twist of coming at a time when the government fears losing its military aid from the United States following the killing of Osama bin Laden in Abbottabad. Pakistan's government has issued sukuk fairly regularly, but has remained largely focused on its domestic market.

Malaysia, which along with Indonesia, have become countries of interest for global investors, have both been active or plan to be active in sukuk issuance. The latest sukuk from Malaysia is a corporate issuer, Ranhill, raising MYR 710 million ($236 million). The Malaysian sukuk market, in contrast to the GCC and most of the rest of the world has an active market with a much more regular issuance by corporates and government-related companies like Petronas (the government issued its last large sukuk form $1.25 billion in 2010 after close to a decade without a global sukuk). Malaysia has attracted investors because of its growing economy and strengthening Ringgit, which are somewhat exogenous to the sukuk market (Indonesia has seen inflows for similar reasons).

As this brief tour of recent sukuk announcements demonstrates, the sukuk market is largely determined by factors outside of the Islamic finance industry and is also influenced by regional factors that create divergence in terms of issuance. Just like the conventional financial markets (e.g. bond markets), the reasons why sukuk are issued has much more to do with the issuer, the country where the issuer and investors are located and historical factors around the stage of development of the country's Islamic finance industry than it does to with the growth in the global sukuk market as a whole.

What is wrong with GCC sukuk markets?

Coming up to the end of the year, it is time to reflect back on the year just past and look forward to 2011. Kuwait Finance House Research prepared a report, which is summarized in a press release, which predicts that issuance in 2011 will surpass the $34 billion issued at the peak in 2007 (issuance in 2010 is estimated to be almost equal to the 2007 level). To avoid just repeating the KFHR report (I would suggest reading the press release summary) I will offer my own thoughts using a few of the statistics in the report.

First, there have been two themes in 2010 sukuk issuance: 1) sovereign issues; and, 2) the move eastward with GCC issuers tapping the markets in Malaysia instead of the domestic market (either through local currency issues or global USD issues). This is a mixed bag. It certainly aids the development of a more harmonized market for sukuk in terms of Shari'ah standards as GCC issuers are becoming familiar with Malaysian Shari'ah standards and tailoring their sukuk issued in Malaysia to the local market, while also issuing some sukuk in the GCC as well.

However, the move eastward by GCC issuers is also exaggerating the disparity between primary markets for sukuk in Malaysia and the GCC. Malaysia's GDP in 2009 was $193 billion compared with Saudi Arabia's GDP of $369 billion in the same year and the GCC as a whole representing $912 billion in GDP in 2009. Yet, sukuk issuance in Malaysia makes up 72.3% of the entire sukuk market in the first nine months of 2010 (9M10). There is also concentration of certain issuers: sovereigns make up 77.3% of issuers in 9M10 while financial services issuers (which make up a large proportion of conventional bond issuers) represented only 9.8% with utilities issuing 7.6% of sukuk issued.

The sukuk markets should ideally be representative of the size of the total market (measured by GDP) because they should finance real economic activity (at least if the spin from the press releases are to be believed). They should also be in proportion to the Muslim population of the countries they come from because the primary reason they exist is to provide a Shari'ah-compliant alternative to conventional bonds for both Shari'ah-sensitive investors and issuers. On both marks, the current sukuk market structure fails. Malaysia's GDP is roughly 20% of the GCC GDP. Malaysia also has a large non-Muslim population (40% according to Wikipedia, citing the Malaysian census).

Let's look at what the sukuk market should be in the GCC based on Malaysia, using a very rough approximation with many flaws. I use the following numbers to get a rough approximation: relative GDP of Malaysia to the GCC of 20%, the Muslim populations in Malaysia (60%) and GCC (assuming 90% Muslim population in the GCC) and the KFHR estimate of $34 billion in sukuk issued (or $24.5 billion originating from Malaysia). Adjusting for the differences in Muslim population and relative GDP, there should have been $184.4 billion in sukuk issuance in the GCC (taking the sukuk in Malaysia, dividing by the Muslim share of the population, dividing by the relative GDP of Malaysia and multiplying by my estimate of the Muslim population of the GCC). This leaves $175 billion in missing sukuk from the GCC assuming that all the non-Malaysian sukuk were issued in the GCC.

This number is essentially made up, but is based on a rough estimate about the potential for the sukuk markets in the GCC, if it were pulling its weight with Malaysia in terms of GDP and the Muslim population. It can be discounted heavily to adjust for my estimation process and still leaves a large number relative to the total sukuk issuance of 2010. There are two conflicting reasons for the gap. First, one of the primary uses for sukuk is to fill the need for high-grade, government or corporates of similar quality bonds to fill the portfolios of pension funds, takaful funds and for banks to earn a relatively safe return with their surplus funds. Second, many investors in the GCC and elsewhere would like to be able to include a sukuk component in their overall portfolio, but will hesitate if they are not able to change the components of that portfolio quickly with changing market conditions (or their own need for liquidity).

These two forces are pulling at each other, but generally the former is dominating. Sukuk are issued and snapped up by hold-to-maturity investors. There is a small, illiquid secondary market for sukuk and those markets were hit sharply by the Dubai debt crisis. Despite representing a small part of the GCC, the issuance from Dubai entities and other UAE issuers (who were caught up in the lack of confidence among investors) represented a large share of the GCC sukuk issuance in the boom years. This confidence will not be restored quickly and therefore issuers have either retreated from the market altogether (or fled to Malaysia) or focused their issuance on hold-to-maturity issues.

However, this serves to limit the size of the corporate sukuk market in the GCC and ultimately will hurt the hold-to-maturity investors, as it has already deprived the investors needing liquidity of many investment options. The flood of GCC issuers looking to Malaysia is making the problem more imminent as redeemed and defaulted sukuk are not being replaced by new sukuk issued in the GCC in a currency that does not create currency risk for local issuers (whose home currency is tied to the dollar, which is depreciating against the Ringgit, but which may reverse).

All the parties involved, from issues in the GCC, hold-to-maturity investors and investors seeking a liquid, fixed income investment, all need more local issuance. Issuers need a competitive pricing environment with no currency risk (at least until Shari'ah-compliant currency hedging becomes more common and less "new"). Whatever it takes for GCC countries to attract more issuance, they should do or else sukuk may become a Malaysian phenomenon, despite a size advantage in terms both of Muslim population and GDP held by the GCC.

Until the GCC markets are "fixed" (or an alternative market like the Luxembourg Stock Exchange becomes the go-to location for sukuk issuers), there will continue to be a large gap even in "one of the main components of the Islamic financial system" as KFH Research called the sukuk market.

IILM appointments

I don't generally post press releases, but I think the appointments by the International Islamic Liquidity Management Center are important.  I have two brief comments.  The Shari'ah board of six scholars is not the "top 6" well known names in the industry, which I think is positive because it includes two top scholars, Sh. Elgari and Daud Bakar with other scholars whom I have not run across before.  My other comment is that it was expected that Zeti Akhtar Aziz would be the chairperson of the IILM board because the institution is headquartered in Malaysia.  However, I thought it was interesting that the deputy is the Yves Mersch, governor of the central bank of Luxembourg.  Luxembourg is the only European member of the IFSB (which was responsible for the creation of the IILM).  I don't have time to dig more into the press release, so here it is:

[Kuala Lumpur & Jeddah, 13 December 2010 / 7 Muharam 1432] - The International Islamic Liquidity Management Corporation (IILM) wishes to announce the appointment of Mr. Mahmoud AbuShamma as its first Chief Executive Officer (CEO) for a three-year tenure effective 1 February 2011.

Prior to his appointment at the IILM, Mr. Mahmoud has served as the Global Head of HSBC Amanah Coverage at HSBC Bank Middle East Limited, Dubai in charge of critical HSBC Amanah relationships globally, including Governments, high networth individuals and top corporate clients. He was instrumental in establishing the HSBC Amanah Syariah unit - the first foreign bank to open an Islamic retail banking unit in Indonesia, and served as its Head from 2003 to 2010. In London, he established and headed the HSBC's Islamic Treasury Unit and originated the first Islamic Syndication by HSBC Amanah.

Mr. Mahmoud will lead a team of Islamic finance experts and professionals to operationalise the IILM's mandates particularly to issue highly rated short-term Shariah-compliant financial instruments in major reserve currencies and to develop platform to enhance cross-border Islamic finance activities. With his relevant global working experience and networks, Mr. Mahmoud and his team will be responsible in meeting IILM's objectives to facilitate cross-border liquidity management and to foster regional and international co-operation in building robust liquidity management infrastructures.

As the CEO, Mr. Mahmoud will report to the IILM's Governing Board which will set its strategic policy direction and to the Board Executive Committee for its general conduct of operations. The members of the IILM's Governing are governors of its central bank and regulatory agencies members as well as presidents of its multi-lateral institution members. The IILM's Board Executive Committee, which comprises Governing Board members or their senior representatives, is delegated by the Governing Board to have an overview on the IILM operations and its members. This governance structure will also ensure strategic consultation with members of the IILM on a regular and collaborative basis.

The IILM also wishes to announce the appointment of Her Excellency Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, as the first Chairperson of its Governing Board and His Excellency Yves Mersch, Governor of the Central Bank of Luxembourg, as the Deputy Chairperson. The offices of the Chairperson and the Deputy Chairperson will be rotated annually amongst the IILM's shareholders in accordance to the Articles of Agreement of the IILM. Her Excellency Dr Zeti Akhtar Aziz has been appointed as the Chairperson of the IILM's Board Executive Committee.

The Governing Board of the IILM has appointed six internationally-renowned scholars to sit on its Shariah Committee. The Shariah Committee will decide on any Shariah issues relating to business, operations or activities of the IILM, its subsidiaries, special purpose entities or trusts. The appointed scholars who will serve for a three-year tenure are as follows (in alphabetical order):

1. Dr. Ahmed Ali Abdalla Hamad
2. Mr. Cecep Maskanul Hakim
3. Dr. Mohamed Ali Elgari
4. Dr. Mohd Daud Bakar
5. Dr. Umar Bashir Aliyu
6. Dr. Waleed Bin Hady Al Mullah

International Islamic Liquidity Management Corporation
13 December 2010

About the IILM

The IILM is an international entity established to issue short-term Shariah-compliant financial instruments to facilitate more efficient liquidity management for institutions offering Islamic financial services (IIFS) and to support the increasing cross-border transactions between IIFS. Its membership is opened to central banks, monetary authorities, financial regulatory authorities, government ministries or agencies that have regulatory oversight on finance or trade and commerce; and multi-lateral organisations which will hold shares of the IILM. The IILM was established on 25 October 2010 with 14 founding shareholders (consisting of twelve central banks or monetary authorities of Indonesia, Iran, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates) and two multi-lateral institutions (the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector). Its head office is located in Kuala Lumpur and a dedicated legislation is being discussed in Malaysia's Parliament to accord the IILM with special status, privileges and immunities. For further details about the IILM, please contact:

Chairperson of the Governing Board
International Islamic Liquidity Management Corporation
Level 40
Tower 2, Petronas Twin Tower
Kuala Lumpur City Centre
50088, Kuala Lumpur
Malaysia
Telephone : +603-2168 4277
Facsimile : +603-2168 4677

E-mail enquiry can be sent to the IILM's temporary administrative secretariat (e-mail address: hizzad@bnm.gov.my (for the attention of Mr. Ahmad Hizzad Baharuddin)).

Tahawwut slow to catch on in the GCC, Nakheel/Dubai World face trade creditors' claims

Lack of familiarity with derivatives products in the GCC has hampered the adoption and use of the Tahawwut Master Agreement for Shari'ah-compliant derivatives. There is also some skepticism that the implementation of the product is Shari'ah-compliant because the Master Agreement is just a template and not a specific product.

Although Nakheel has offered to pay trade creditors 40 percent in cash with the remainder in a tradable sukuk yielding 10%, several of Dubai World's trade creditors have taken their claims to the Dubai World Tribunal set up at the DIFC. Nakheel needs 95% agreement in order to issue the sukuk to pay the deferred portion of the amounts owed to trade creditors. One of Nakheel's trade creditors, Construction Delivery Group filed suit with the tribunal claiming it is owed Dh 50 million (13.6 million) for a construction management contract.

Other News

• Mushtak Parker provides a good assessment of an IMF report that found that Islamic banks fared better during the financial crisis.
  
• A study from Deloitte found that 79% of executives believe Islamic finance is growing. 66% believe the industry is under-regulated.
  
• Indonesia may issue a global bond or sukuk for $650 million in the first quarter of 2011. Jordan formed a committee to study the changes needed to be able to issue sukuk and a statement from a government official stated that the government is "serious about using Islamic sukuk to provide funds for carrying out vital and top priority projects.
  
• Citigroup, which co-managed the Kuveyt Turk sukuk says it is in talks for more corporate sukuk issuance in Turkey. AmIslamic Bank in Malaysia issued RM550 million in 7-year sukuk.
  
• The governor of the Kuwaiti central bank says that with five Islamic banks, the market for Islamic banking is saturated.
  
• RAM Islamic projects that the sukuk market in Malaysia will continue to grow.
  
• Qatar First Investment Bank and Gulfmena Alternative Investments are launching an Islamic asset management firm. Allfunds Bank launched an Islamic Services Unit to provide a B2B fund platform of Shari'ah-compliant funds.
  
• Luxembourg will host the 8th Annual Summit of the Islamic Financial Services Board (IFSB), the first time it has taken place in the EU. Luxembourg is the only EU member country that is a member of the IFSB.
  
• Zawya and the Ethica Institute of Islamic Finance announced a partnership for Islamic Banking certification and training.
  
• Pakistan, Afghanistan and Senegal see Islamic banking as a way to bring underbanked people into the financial system. Bloomberg updated its list of planned and expected sukuk.
  
• The Central Bank of Bahrain's 6-month sukuk al-ijara was heavily oversubscribed with BD62 million (US$164 million) in subscriptions received for the regular BD10 million issue.
  

DIFC template for sukuk, Islamic banks in Africa

I am disappointed that it has taken this long, but the DIFC seems poised to provide a standardized template for sukuk based on the recent IFC sukuk. The work has been labeled the "Dubai docs" in reference to the role that the DIFC is playing in providing a standardized set of sukuk documents. Until now, each sukuk has been structured individually and there is no set of documents that creates a standardized offering document so the costs, estimated at $250,000, is borne by each issuer having to build an offering document without a standard reference contract. In other countries like Pakistan, the Central Bank offers standardized contracts for basic products like murabaha and the IIFM has issued a standardized murabaha contract, as well as one for derivatives (tahawwut) with the International Swaps and Derivatives Association (ISDA). I think this will be something that spurs similar documents elsewhere in the world that will reduce the cost of sukuk issuance and encourage new issuers who would have otherwise been deterred by the cost to enter the market. This will, in particular, bring smaller issuers into the market to provide a source for a sukuk yield curve that does not just include sovereign issuers nad high-grade corporate issuers. The more the sukuk market can develop and provide a separate yield curve for sukuk issuers, the more ti will open the market up to other new issuers. The more sukuk that are issued (and especially the diversity in issuer characteristics) will provide alternative investment opportunities to holders of sukuk, which will help the secondary market develop further.

Islamic banks starting in Sub-Saharan Africa face an image problem that they are only catering to Muslims. The Central Bank of Kenya is working on a framework to issue sukuk to attract capital from the Gulf states. The Central Bank governor gave a speech recently at a conference in Nairobi, Kenya along with other representatives of Islamic banks in Kenya and other parts of Africa. The Standard Bank Group is starting to provide Islamic banking products in Tanzania. In addition, recently National Bank of Commerce launched an Islamic banking service.

Other News

• Sukuk is still a niche market and the Nakheel sukuk resolution will not revive the market. Nakheel's 2010 sukuk maturing next week will not revive the market on its own. This is expected to occur even without a restructuring agreement for Dubai World's debts, which HSBC describes as "very fair".
  
• Standard & Poor's rated an Islamic fund, its first such rating. The fund is offered by European Finance House.
  
• Lebanon is not planning to offer a sovereign sukuk. Luxembourg, however, is considering offering a sovereign sukuk.
  
• Another article presents comments on the need for a systemic stability regulator for the Islamic financial industry.
  
• Al Baraka expects to complete the purchase of a stake in Bank Muamalat by the end of the year.
  
• Hawkamah and the American Bar Association organized a conference in Dubai on Islamic finance at the DIFC.
  
• Indonesia's ministry of finance plans to raise 1 trillion rupiah ($110.8 million) in sukuk on May 11. Several recent sukuk auctions have failed recently with investors demanding a higher yield than the ministry of finance is willing to pay.
  
• Several sukuk, including two Nakheel sukuk, have been suspended from NASDAQ Dubai for failure to file financial statements and annual reports.
  
• Cagamas and Al-Rajhi bank are cooperating to issue a sukuk recognized as being in compliance with Shari'ah globally.
  
• Malaysian firm MTD InfraPerdana issued a MYR100 million ($31.2 million sukuk).
  

Islamic banks v. conventional banks, Islamic finance & SRI, GE Capital sukuk

A study by two professors at Ajman University of Science and Technology found that Islamic banks outdid conventional banks. However, the study, as reported, only looked at four years of data for three Islamic and three conventional banks. Although it is useful to know that Islamic banks have outperformed conventional banks in the past four years (at least among a 6 bank sample), it is not really a useful finding for the industry as a whole.

The dangers of extrapolating using data on just a few institutions over a few years are well known, there is an additional hiccup that could reduce the value of the findings further. The sample period, 2006-2009, was one in which the conventional financial industry saw the most challenging events worldwide as global credit markets froze up and economic growth slowed. And this period was also accompanied by the impacts of these events on Islamic banks (I have long argued that they were susceptible to the financial crisis and economic downturn). However, the financial complexity of conventional banks versus Islamic banks is divergent and not just because of the requirements for Shari'ah-compliance.

Islamic banks are generally operating using primarily basic contracts like murabaha and ijara and have very little use of mudaraba and musharaka. They also have nearly no exposure to any derivatives products which have been particularly volatile. This volatility extends beyond the so-called toxic derivatives. For example, the volatility index, which is based on options on index components of the Standard & Poor's 500 Index, reached record highs in 2008 and have been elevated for much of 2008 and 2009.

Islamic banks, therefore, are involved in lower risk investments compared to their conventional competitors. They also do not have significant exposure to the products which are widely held up as the 'preferred' Islamic products with profit-and-loss sharing. I offer this criticism only to put what I am reading about the study in context of where there might be questions remaining that cannot be answered based on the current experience in Islamic banking. I also should note that I have not read the study. I would appreciate if it were emailed to me so that I could give a more complete analysis.

An article about sustainable finance which criticizes the 'value-neutral' approach to finance points to Islamic finance as potentially providing an example and starting point for a sustainable financial industry that incorporates social welfare in the financial industry. While it acknowledges the limitations of Islamic finance as it currently is practiced (particularly the focus on negative screens and an absence of positive screens), it does demonstrate the benefits of Islamic finance as one method of implementing social responsibility in finance. In a related development, Islamic investment bank First Energy Bank is investing $1 billion in a Saudi solar plant.

GE Capital is planning its first sukuk, which is expected to be a 5-year sukuk of more than $500 million.

The Atlanta-based unit of Arcapita, the Bahraini private equity group is profiled in an Atlanta business newspaper, including a description of the group's investment strategy which differs from the stereotypical idea of private equity, "Arcapita, unlike some private equity firms, doesn’t have an exit requirement for its investments. Still, 'we don’t hold anything forever'" according to Charles Ogburn, the executive director and head of corporate investment.

Other News

• Saad Trading, Contracting & Financial Services announced that the Golden Belt 1 Sukuk Company, the issuer SPV for Saad's $650 million sukuk due in 2012, would be unable to make a periodic payment because the company's assets were frozen.
  
• The Investment Dar is planning to present its $3.5 billion restructuring plan to creditors soon.
  
• Gulf Finance House received a $100 million convertible murabaha facility from Deutsche Bank, which follows its $100 million convertible murabaha from Macquarie Bank. This is a part of the firm's efforts to "redesign" their business model.
  
• Luxembourg would 'welcome' the establishment of an Islamic bank. The President of the Central Bank, Yves Mersch, says that "We had Islamic banking institutions in the seventies which discontinued its services and as for now there is no Islamic bank that operates in Luxembourg, but there is no prohibition to have a setup of such an institution".
  
• Sarasin, the Swiss firm offering a Shari'ah-compliant wealth management offering will start with the Gulf but also include Southeast Asia next.
  
• Malaysia continues to see growth in its domestic Islamic finance industry.
  
• The Islamic Development Bank is going to offer financing of $1 billion to agricultural projects with the UN Food and Agriculture Organization (FAO).
  

Islamic banking to the poor, women in Islamic finance and Luxemborg vies to be a western hub for IF

Islamic banking underserves the poor

An article that came out this weekend addressed an interesting point. Do Islamic banks address only a few wealthy Muslims or can they do more to reach poorer Muslims. My personal belief is that the Islamic finance has not yet developed a model for serving poorer Muslims, but that the success of the Grameen Bank at reaching the poor has caught the attention of the industry and halal microfinance will develop over the next few years. Here at the IHI, we are working on a halal microfinance program and there is an Islamic microfinance conference occuring on April 14th at Harvard University's Islamic finance project to try and bridge the gap between the Islamic finance industry and the microfinancing industry. I think this is an area with significant potential which will be a valuable asset for the Islamic banking portfolio. One of the other areas in which Islamic banking should look to expand is providing additional services for middle class Muslims, particularly those in the West.

IIFF discusses role for women in Islamic finance

The International Islamic Finance Forum which opened today in Dubai addressed the role for women in Islamic finance. Addressing the forum was HE Sheikha Lubna Al-Qasimi the UAE Minister of Economy and Chief Executive of Tejari, a Middle Eastern business-to-business online marketplace. The article describes how "It is important for women to take their place in IF not only to broaden the appeal, but also to alleviate a potential bottleneck in the growth of IF due to a general shortage of suitable professionals." While there are cultural barriers to increasing the role of women in Islamic finance, the industry has a need for female professionals to continue growing rapidly and to provide service in banks like the Saudi women-only branches.

Luxembourg jumps into competition as western hub of Islamic finance

The Luxembourg Stock Exchange entered the competition to become the western hub for the Islamic finance industry by reducing the regulatory burden for issuing sukuk. The new regulations will treat sukuk in a similar way they are treated in the U.K. A lawyer working in the industry describes that "It's not exactly the same and it's still considered best to be asset-backed, but they will not apply the same disclosure rules to securities, so you won't have to provide the same detail on the underlying assets."

Other news

The Bahrain Chapter of the Institute of Chartered Accountants of India will hold a seminar on Islamic finance this week.

A forthcoming five year plan will reveal plans by Gulf Finance House to expand into Asia

Dow Jones will begin two new indexes as part of its Islamic Market Indexes tracking Shari'ah compliant stocks on the Dubai Financial Market. The indexes are the Dow Jones DFM Index and the Dow Jones DFM Titans 10 Index.

After reports that EPF wanted two English banks to be strategic partners, Rashid Hussain Bhd, the banking group for which the partners were sought denies knowing of the partners.