The International Islamic Financial Market (IIFM) yesterday released its Reference Paper on I'aadat Al Shira'a (Repo Alternative) concepts and structuring possibilities.
"The lack of liquidity management tools, particularly a repo-like product, is a challenge that has been faced by the Islamic finance industry for some time. IIFM initiated the process with the assistance of the working team consisting of leading practitioners from the industry to find a solution or identify the key factors which may eventually lead to the development of a product which Islamic financial institutions can use for their short-term liquidity management requirements," said Ijlal Alvi, CEO of IIFM commenting on the importance.
"Finding a solution for Repo Alternative product that satisfies Sharia while also being acceptable to the general market has been a real challenge. As an ex repo trader, I know how important this product is to the short term & fixed income traders. I am convinced wider use by the market of I'aadat Al Shira'a will add liquidity in the system in terms of cash funding and liquidity float of Sukuk. It will 'oil' the wheels for efficiency and be a boost for Sukuk," said Ismail Dadabhoy, Executive Director-Head of Islamic Finance at UBS Investment Bank, Dubai and Chairman of the IIFM.
"Various different approaches have been seen in the market up to now. This paper will, Insh'Allah, serve to assist the market in developing a consensus approach," said Habib Motani, Partner, Clifford Chance LLP, London and member of the IIFM.
© Bahrain Tribune 2010
