IIFM Holds Industry Consultation on Sukuk Standardization

PRESS RELEASE For immediate release

Dubai, United Arab Emirates, Sunday 21st April 2014 – Bahrain based international standard-setting body, the International Islamic Financial Market (IIFM) organized an industry consultative meeting on “Sukuk Standardization (Structures, Documentation & Guidelines)”. The meeting was hosted by Dubai International Financial Centre (DIFC) at its Conference Centre and was attended by a diverse group of experts which included a number of regulators, renowned Shari‘ah scholars, senior representatives from Islamic financial institutions, local & international law firms, accounting firms, consultants, rating agencies, multilateral developments institutions (International Monetary Fund, Islamic Development Bank Group etc) and other representatives from the industry.

In the past few years, Islamic financial market has witnessed enormous growth in Sukuk issuances from sovereigns, supranational Institutions, financial institutions and corporates covering many jurisdictions. As Sukuk issuance accelerated, with it, developed number of different structures that were used to construct Shari‘ah complaint Sukuk. This in turn has brought its own complexities and understanding between the issuers, investors, traders, lawyers and regulators. For the industry to continue its growth, it needs to take steps to bring about clearer understanding with documentation and product standards, guidelines, best business practices and transparency, while strengthening and streamlining the Shari‘ah approval processes.

The objective of this industry consultation was to discuss how the industry, given the facts of Sukuk rapid growth, needs to move forward through embarking on creating standards. In order to maintain the high level of confidence, transparency and global Islamic market unification, the development of IIFM Sukuk standards (Structures, Documentation and Guidelines) will play a major role in the orderly and sustainable development of the Sukuk market.

Chirag Shah, Chief Strategy and Business Development Officer at DIFC Authority, commented: “There has been a clear shift towards Shari’ah compliant offerings over the last year, in line with His Highness Sheikh Mohammed bin Rashid Al Maktoum’s initiative 1 towards establishing Dubai as a leading Islamic Economy. At DIFC, we continue to support the growth of the Islamic Finance pipeline by creating a business environment conducive for these activities and collaborating on events, such as the IIFM consultative meeting, to encourage discourse from industry experts on the topic.”

Ijlal Ahmed Alvi, Chief Executive Officer of IIFM, said that the purpose of the consultative seminar was to seek views and recommendations of experts on key issues highlighted in the concept paper presented by IIFM concerning various Sukuk structures particularly Ijarah, Mudarabah, Wakalah, Musharakah and Convertible/Exchangeable Sukuk in line with IIFM comprehensive standard development process as per its mandate.

The discussion was led by honorable Shari‘ah scholars namely Shaikh Dr. Nizam Yaquby, Shaikh Prof. Dr. Yousef Al Shubaily, Shaikh Esam Mohammed Ishaq, Shaikh Dr. Mohamad Akram Laldin, Shaikh Dr. Muhammad Imran Usmani and Dr. Eltigani Abdelgadir Ahmad as well as IIFM in-house Shari‘ah Head Dr. Ahmad Rufai. The deliberations provided clear roadmap to IIFM on developing guidelines and standardization of Sukuk Al Ijarah structure on a priority basis.

The role of IIFM in organizing this consultation was appreciated by the attendees. The issues highlighted in the concept paper and deliberations will assist, not only in bringing improvement in Islamic Capital Market, but will also assist the global unification efforts of IIFM and other infrastructure institutions.

Mr. Alvi on behalf of IIFM Board of Directors thanked DIFC for hosting the consultation and the participants for their support, active participation and expert guidance on the Sukuk structures and related issues to be developed by IIFM in bringing further standardization in Sukuk.

----- Ends -----

About IIFM IIFM is the Islamic Financial Services Industry’s standard-setting organization focused on the Islamic Capital & Money Market (ICMM) segment of the industry. Its primary focus lies in the standardization of Islamic financial products, documentation and related processes at the global level. IIFM also contributes in the development of ICMM by organizing specialized industry seminars, workshops and consultative meetings as well as research on Sukuk issuances worldwide.

IIFM was founded with the collective efforts of the Central Bank of Bahrain, Islamic Development Bank (a multilateral institution based in Saudi Arabia), Autoriti Monetari (i.e. Monetary Authority) Brunei Darussalam, Bank Indonesia, Bank Negara Malaysia (delegated to Labuan Financial Services Authority) and the Central Bank of Sudan as a neutral and non-profit organization.

Besides the founding members, IIFM is supported by other jurisdictional members such as State Bank of Pakistan, Dubai International Financial Centre as well as a number of regional and international financial institutions and other market participants.

To date IIFM has published number of key Standard Master Agreements, including:

2  Interbank Unrestricted Master Investment Wakalah Agreement & its Operational Guidance Memorandum  ISDA/IIFM Tahawwut (Hedging) Master Agreement  Mubadalatul Arbaah (Profit Rate Swap) Standard Documentation  Master Agreements for Treasury Placement

IIFM is also in the process of developing several important documentation and product standards related to the Islamic Capital & Money Market. It has also published global Sukuk reports (first, second and third editions) and organized a number of seminar and workshops.

For further inquires on IIFM, please contact: International Islamic Financial Market Usman Mohammad Naseer Business Development Officer Email: [email protected] Tel: +973 17 500 161 Website: www.iifm.net

About DIFC The Dubai International Financial Centre (DIFC) is the financial and business hub connecting the region’s emerging markets with the developed markets of Europe, Asia and the Americas.

Since its launch in 2004, DIFC, a purposely built financial free zone, has been committed to encouraging economic growth and development in the region through its strong financial and business infrastructure. Currently, DIFC's client base comprises almost 1,039 active registered firms, including 22 of the world’s top 30 banks, six of the top ten insurers, seven of the top 10 law firms, 11 of the world’s top 20 money managers and seven of the top ten consultant companies in the world. Around 15 thousand employees operate in an open environment complemented by international legal and regulatory standards. DIFC offers its member companies benefits such as 100 per cent foreign ownership, zero per cent tax rate, with no restriction on capital convertibility or profit repatriation. DIFC has its own independent financial and ancillary services regulatory body, the Dubai Financial Services Authority (DFSA). It also has the DIFC Courts, which is an independent common law judiciary based in DIFC with jurisdiction over civil and commercial disputes in or relating to the Centre.

DIFC is built upon a modern legal, regulatory and physical infrastructure, which makes it the destination of choice for Financial Services firms establishing a presence in the region.

For further information, please visit our website: www.difc.ae, or follow us on Twitter @DIFC.

For further inquiries on DIFC, please contact: Dubai International Financial Centre Shaima Al Zarouni PR Manager Email: [email protected] Tel: +971 4 362 2432