The International Islamic Financial Market (IIFM) is forging ahead with a number of critical projects aimed at furthering the organization’s core mission of facilitating and stimulating the development of Islamic capital and money markets.
Re-energized by an ambitious business plan and a re-launch in Q4 2006, the organization is making noticeable progress in advancing a number of industry-building initiatives, which will ensure the establishment of vibrant, transparent and robust international Islamic financial markets.
“We are implementing a multi-pronged program of action that seeks to develop the overall infrastructure for Islamic capital and money markets, as well as specific components of such markets,” said Mr. Ijlal Alvi, Chief Executive Officer of IIFM.
He was speaking during a press conference, held today in Kuala Lumpur, Malaysia, along the sidelines of the Global Islamic Finance Forum taking place from 26 to 29 March 2007.
“The overall mission of the IIFM is to enhance cross-border trading in Islamic financial instruments by promoting transparency and efficiency, which can only be achieved through uniformity and infrastructure development” said Mr. Alvi.
The centre piece of the IIFM action plan is the development of a Master Agreement for Islamic Derivatives, for which the IIFM has established an alliance with the International Swaps & Derivatives Association (ISDA). The two organizations are carrying out joint work on the development of a Master Agreement for documenting privately negotiated Sharia’h compliant hedging/derivatives transactions. The current stage is the development of a frame work which will be the basis of further work on the possible structure or products for hedging purposes.
The IIFM is also currently assessing, in consultation with industry market participants, the development requirements for Islamic instruments, especially sukuk at primary as well as secondary market level. The development work will commence in next few months. It is expected that a major portion of the work will be carried out in alliance with the International Capital Market Association (a major European market body). The work will also include developing recommendations, standard documentation, standard language and guidance for sukuk issuance (primary market); rules and recommendations for secondary market transactions involving sukuk and other Islamic financial instruments; as well as the provision of on-line transaction matching, reporting and confirmation services for sukuk and other Islamic financial instruments and ancillary services.
The IIFM is also developing a Master Agreement for Islamic Treasury Murabaha Contracts. The preliminary work was done by the sub-committee of the Documentary Convergence Committee (DCC) and now the project is open for global participations. This is the first such project to get under way, with plans for developing a whole range of Shariah Compliant documents and certain products, including Mudarabas, Ijaras, in the future.
The IIFM is also working on Islamic liquidity management issues and non-commercial product development. This is a research and development project on Islamic inter-bank market and products, with initial emphasis on short term sukuk and global Islamic liquidity management and related issues. The IIFM Secretariat will soon be launching the project which is expected to be led by several major institutions.
Another key initiative is the development of an Islamic capital market platform, for which a feasibility study is currently under way. The purpose of the feasibility study is to provide and prepare an overview which identifies the key aspects that would need to be developed and put in place for a robust Islamic Capital Market Management and Trading System. The study is looking at various aspects involving secondary market, including trading, clearing and settlement.
Such market development efforts are complemented by resource and capacity building initiatives by the IIFM. To enable knowledge sharing and training, the IIFM regularly organizes specialized forums on issues related to Islamic Capital & Short Term financial markets. So far, three such events have been successfully staged in Indonesia, Bahrain, and Pakistan.
A fourth highly focused forum is scheduled to be held in Bahrain on 18 & 19 June 2007. The event will consist of sessions on Islamic REITS, Liquidity Management and guidance and case study workshops on IIFM industry building initiatives. The event, which will be attended by industry experts, has already attracted the support of a number of prominent international institutions.
The event is being co-organized by the Islamic Research and Training Institute (IRTI) of the Islamic Development Bank, while UK-based European International Islamic Bank (EIIB) is the platinum sponsor and Kuwait Finance House (Bahrain) and Calyon Bank (Bahrain) are gold sponsors.
In addition, international industry bodies, UK-based International Capital Market Association (ICMA) and US-based International Swaps & Derivatives Association (ISDA) are major participants in the upcoming event, which will be moderated by Mr. Abdulkader Thomas of Kuwait-based SHAPE Financial Corporation.
About International Islamic Financial Market
The International Islamic Financial Market (IIFM) was established by the collective efforts of its founding and permanent members namely: Islamic Development Bank, the central banks of Bahrain, Malaysia, Sudan Indonesia, Pakistan and the Brunei Finance Ministry. After extensive consultation by the industry players, IIFM has emerged as a market body with the mandate to spur the development of Islamic Capital and Money Market.
The mission of the IIFM, a globally-focused non-profit institution, is to develop the primary Islamic and short term financial market and, subsequently, the creation of a secondary market for Islamic financial instruments. IIFM is also focused on the advancement and standardization of Islamic financial instrument structures and: contracts, infrastructure development, Islamic management system, issuance of self regulatory guidelines and recommendations