LONDON, Jan 26: Seemingly driven by demand from its nearly 2 million Muslim population and encouraged also perhaps by the $4 billion of Middle East money swirling in the city’s banking sector Britain has become a keen practitioner of Islamic financial system.

A two-hour long seminar organised by the City of London on Friday underlined the fact that Britain’s principles-based regulatory system had no problems interacting with the Shariah-based Islamic financial system.

The seminar noted that the Islamic mortgage market in Britain has expanded to over $1 billion in seven years.

The Lord Mayor of London, Alderman John Stuttard, who inaugurated the seminar, proudly claimed that internationally, the city was financing huge infrastructure developments, effectively mobilising and using large amounts of international and local Muslim capital.

“In short, we believe more wholesale and retail financial products are being invented, developed, approved and marketed from London than any other centre,” he added.

He said that from banking to insurance, the UK had become the world’s foremost centre of Islamic finance.

In his opinion the development of Islamic finance provided the one billion plus Muslims the world over, their governments, banks and investment institutions, with a means of engagement with the global financial system, which complemented traditional Western finance and increasingly could interact with it.

“Here in Britain, the rapid growth of a Muslim middle class, with the same needs for housing, insurance, savings and asset management as non-Muslim friends and neighbours, has created a market and it is a market, which the City of London is foremost in catering for not only domestically, but around the world,” he added.

He said there is a strong record of financial innovation in the city and Shariah compliant finance was a shinning example.

The other speakers endorsed the Lord Mayor’s ideas and said that over the last decade or so Britain has become one of world’s major centres for the development of the modern Islamic finance sector.

They said the legal and regulatory structures for this sector have been put in place and new products were being introduced at a fast pace, embracing banking, project finance, risk management, private wealth and even the emissions trading markets.

The UK’s first fully Islamic retail bank, the Islamic Bank of Great Britain, was opened in February 2005 and is a leader in this field. And some 200-250 branches of HSBC are at present engaged in retail trading in Islamic financial products.

Others who spoke included Stella Cox, managing director of Dawnay Day (Islamic banking framework), Tracy Elner, director Ashton Commodities (interaction with the commodities and carbon trading markets), Iqbal Asaria, Business and Economics Committee, Muslim Council of Britain (interaction with Islamic communities in Britain and internationally), Derek Weist, acting CEO, ABC International Bank (Islamic investment management) and Habib Motani, partner, Clifford Chance (legal and regulatory framework)