Jan 02 2012
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Launch of world's first Islamic interbank rate
The world's first Islamic finance benchmark rate, designed to provide an objective and dedicated indicator for the average expected return on Shariah-compliant short-term interbank funding, has been launched by Thomson Reuters .
The Islamic Interbank Benchmark Rate (IIBR), announced at the 18th annual World Islamic Banking Conference in Bahrain, uses the contributed rates of 16 Islamic banks and the Islamic sections of conventional banks to provide a reliable alternative for pricing Islamic instruments to the conventional interest-based benchmarks used for mainstream finance.
"The de-linking from conventional performance benchmarks started more than a dozen years ago and now we are extremely proud to offer the world's first Islamic pricing benchmark, the Thomson Reuters Islamic Interbank Benchmark Rate," said Rushdi Siddiqui, global head of Islamic finance, Thomson Reuters .
The benchmark's ongoing implementation and integrity will be overseen by an Islamic benchmark committee consisting of more than 20 Islamic finance institutions, chaired by Dr. Nasser Saidi, chief economist of the Dubai International Financial Center (DIFC), and a Shariah committee consisting of four world-respected Shariah scholars.
"Islamic markets will be able to rely on the IIBR and it will become an international reference rate for both conventional and Sharia-compliant transactions. Our aim is to provide an IIBR that is reliable, timely, representative of market conditions, transparent in its construction and accepted as the market reference. Islamic money and financial markets are coming of age and becoming part of the mainstream."
Established in co-operation with the Islamic Development Bank (IDB), the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Bahrain Association of Banks (BAB), the Hawkamah Institute for Corporate Governance and a number of major Islamic banks, the IIBR harnesses Thomson Reuters global benchmark fixings infrastructure, which is used to compile more than 100 fixings around the world.
"The Islamic Development Bank has been a founding member of the Islamic finance industry since its inception in 1975 and the launch of this indigenous Islamic benchmark will prove to be a major milestone in the growth and sustainability of the industry," said Hassan Demirhan, director, treasury department, Islamic Development Bank.
"As the global standard setter for the Islamic finance industry, the AAOIFI is keen to support initiatives that progress the industry towards standardised approaches around the consensus of its members," said Khairul Nizam, deputy secretary general, AAOIFI.
The $1 trillion Islamic finance industry is currently growing at more than 15 per cent a year.
© Cash & Trade 2012
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