| 07 Apr 2008 |
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International Islamic Financial Market finalizing first-ever standardized agreement in Islamic finance
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Manama, Bahrain - 7 April 2008 - The International Islamic Financial Market (IIFM)International Islamic Financial Market (IIFM)
is in the final stages of developing the first-ever standardized Master Agreement, which can be used by Islamic financial institutions across the globe.The Master Agreement for Treasury Placement (MATP) is a benchmark document, which is currently undergoing a final review by leading Islamic financial institutions and conventional institutions offering Islamic finance, to be followed shortly by a final Sharia'h review by prominent scholars.
The MATP will significantly facilitate the Islamic banking industry's commodity Murabaha transactions, which form the bulk of Islamic market transactions, said Mr. Ijlal Alvi, Chief Executive Officer of the IIFMIIFM, an international market development institution focused on the development of the global Islamic capital and money markets.
According to some market estimates, the commodity Murabaha market is worth about US$100 billion at present. Due to the shortage of other Sharia'h compliant instruments, commodity Murabaha is the main and most widely used Islamic money market product for liquidity management purposes by Islamic financial institutions.
"The IIFMIIFM
is delighted to have spearheaded such a project to develop a contract which will cover over 90% of commodity Murabaha transactions in numerous jurisdictions across the world. In addition, the utilization of a standardized agreement will enable more transparency, robustness and consistency in Islamic financial transactions," said Mr. Khalid Hamad, IIFMIIFM Chairman and Executive Director, Banking Supervision, at the Central Bank of Bahrain (CBB)."The standardization of such a contract will have significant positive ramifications for the Islamic banking industry worldwide."
The MATP will carry wide acceptability, given the active involvement of many prominent market players and prominent Sharia'h scholars throughout the process of developing the agreement.
The development process has benefited considerably from the regulatory expertise provided by IIFMIIFM's founding and permanent members, namely Bahrain, Brunei, Indonesia, Malaysia, Pakistan and Sudan, besides the Islamic Development Bank.
A leading global legal firm and accounting and auditing firm have also been involved in the development of the Master Agreement.
"The MATP, once it comes to market in a short while, will be the first Islamic finance contract to be harmonized across the different geographic regions where Islamic banking is practiced," said Mr. Alvi.
is also working on several other market development initiatives, which are aimed at the development of a truly globalised Islamic finance industry and Islamic capital markets.All of the IIFMIIFM projects are being undertaken following detailed consultations with Islamic financial institutions, to identify the needs of the industry.
"We are gratified by the support we have received from Islamic financial institutions and other market players, especially IIFMIIFM members and Sharia'h scholars, in developing the MATP and for their active participation throughout the development process," said Mr. Alvi.
"We are also grateful to the Central Bank of Bahrain for its strong support and continued guidance."
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About International Islamic Financial Market
Bahrain-based International Islamic Financial Market (IIFM)International Islamic Financial Market (IIFM) was founded with the collective efforts of the central banks of Bahrain, Indonesia, Malaysia, Pakistan, Sudan, the Brunei Finance Ministry and Saudi Arabian based Islamic Development Bank; as an infrastructure institution with the mandate to take part in the establishment, development, self-regulation and promotion of the Islamic Capital and Money Market.
IIFMIIFM's primary focus lies in the advancement and standardization of Islamic financial instrument structures, contracts, product development and infrastructure; and the issuance of guidelines and recommendations for the enhancement of Islamic Capital and Money Market globally. In addition, development of the global primary and secondary capital market, short term financial market and the creation of a market for Islamic financial instruments are key areas for IIFMIIFM.
For more information please contact:
International Islamic Financial Market
Kingdom of Bahrain
Ph: +973 17500161
Fax: +973 17500171
E-mail: iifm@batelco.com.bh
Website: www.iifm.net
© Press Release 2008
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