IIFM to wrap up Sukuk Al Ijarah standard suite this year


THE International Islamic Financial Market (IIFM) expects to finalise capital market related “Sukuk Al Ijarah” standard suite of documentation later this year.

In a recent statement, IIFM noted the market consultation exercise with the global working group members concluded in April and the Shariah guidance and approval process will commence now.

In the second phase, IIFM intends to also develop Sukuk Al Ijarah standard documentation covering securitisation market.

“IIFM is recognised with introdu- cing standardised documentation and product confirmations and the benefits are apparent as it can be assessed from the credibility of IIFM standards in the industry,” IIFM chairman Khalid Hamad Abdulrahman Hamad said.

“I am confident that going forward IIFM will continue to set the direction for the industry with the support of all stakeholders,” he added.

IIFM said the working group consultation on Perpetual Tier 1 and Senior Unsecured Sukuk Al Mudarabah standard suite of documentation is currently ongoing and is expected to be completed by the end of the third quarter of 2019 after which Shariah guidance and approval exercise will commence.

The standard-setting body has commenced translation work on its standards and is expected to come out with French versions by early 2020 to cater for French language jurisdictions.

The Bahrain-based body also intends to translate its standards into Bahasa Indonesia in future.

It is also looking to develop training material for its standards in collaboration with consultants and training institutes to offer technically oriented workshops to the users.

During the year, IIFM will be holding an industry consultation meeting to assess the requirement for standar- dising Islamic syndicated finance documentation.

This year, IIFM is also in coordination with its hedging standards joint partner — International Swaps and Derivatives Association — to carry out market consultation to assess requirements for additional Islamic hedging products, smart contracts and other related matters which can eventually lead to additional joint standards in the future.

“IIFM also plans to hold a roundtable meeting in 2019 to be supported by member regulators and financial institutions on global regulatory developments with regards to benchmark reforms — replacement of Interbank Offering Rate (IBOR) with alternative Risk Free Rates which is a major development, and the Islamic finance industry needs to be prepared when the implementation by European and North American regulators commences in 2021,” IIFM CEO Ijlal Ahmed Alvi (picture) said.

IIFM has so far published stan- dards catering to liquidity management, hedging, margin maintenance and trade finance participation which offer Islamic financial institutions a complete set of Shariah-wise widely accepted and legally strong financial documentation and product confirmations benefitting the users with significant cost reductions, ease of execution and greater transparency resulting in an increase in transactional volumes.