South Korea’s central bank has joined the Islamic Financial Services Board (IFSB), one of the main standard-setting bodies for Islamic finance, as regulators across Asia build closer ties to the growing industry.
Guidelines issued by the Kuala Lumpur-based IFSB are gaining prominence as the industry takes a greater share of the banking sector in several majority-Muslim countries and expands into new markets.
The Malaysia-based International Islamic Liquidity Management Corp expanded its sukuk issuance programme on Monday by auctioning $860 million of three-month Islamic bonds at a yield of 0.55635 percent.
The issue brings the total amount of the IILM's outstanding sukuk to $1.35 billion, the body said in a statement.
The IILM, owned by a consortium of central banks from Asia, the Middle East and Africa, is seeking to help Islamic banks manage their short-term funding needs by easing their shortage of liquid, investment-grade financial instruments.
A standard contract template for Islamic inter-bank transactions was launched on Monday as the industry works to diversify the range of liquidity management solutions available.
The latest standard is part of efforts being made to harmonise industry practices by the Bahrain-based International Islamic Financial Market (IIFM), a non-profit industry body which develops specifications for Islamic finance contracts.
A new report by the Islamic Finance Council UK (IFC), a not-for-profit promotional body and the Malaysia-based International Shari’ah Research Academy for Islamic Finance (ISRA), highlights the glaring gap in external Shari’ah audit practice.
Shari’ah audit practices continue to remain an opaque area with varied practices. Recent very public challenges on the Shari’ah authenticity of certain Sukuk structures, exemplify the need to readdress the Shari’ah assurance, governance and certification process. The report highlights a set of considerations directed to Shari’ah scholars, financial institutions, Shari’ah consultancy firms, standard setting bodies and regulators.
Few took notice outside certain coteries of specialist bankers and lawyers, but the launch of a 42 page master documentation for derivatives that comply with Muslim religious principles could have a far-reaching impact on the Islamic finance industry.
The International Islamic Financial Market (IIFM), a Bahrain-based Islamic capital markets body, and the International Swaps and Derivatives Association (ISDA) have for the past four years been working on standardised documentation for derivative instruments that comply with sharia, or Islamic law.