Tuesday, 9th July 2019 Dubai, United Arab Emirates – The 40th meeting of the Board of Directors of the International Islamic Financial Market (IIFM) convened in the Dubai offices of Standard Chartered Bank. The meeting was attended by representatives from IIFM’s founding members namely the Central Bank of Bahrain, Bank Indonesia, Autoriti Monetari Brunei Darussalam, Labuan Financial Services Authority and the Islamic Development Bank in addition to representatives from leading financial institutions on IIFM Board.
The Board of Directors valued IIFM’s efforts in facilitating the unification and harmonization of the Islamic finance industry by producing globally standardized Shari’ah-compliant financial documentation and product confirmations that are contributing massively in the systematic and robust development of the industry. IIFM Standards are developed with the directions of its Board, in consultation with industry stakeholders and under the guidance of distinguished Shari’ah scholars on the IIFM Shari’ah Board (representing 10 different jurisdictions).
IIFM has so far published Standards catering to liquidity management, hedging, margin maintenance and trade finance participation which offer Islamic financial institutions a complete set of Shari’ah 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.
Khalid Hamad Abdulrahman Hamad, Chairman of IIFM said, “IIFM is recognized with introducing standardized documentation and product confirmations and the benefits are apparent as can be assessed from the credibility of IIFM Standards in the industry. I am confident that going forward IIFM will continue to set the direction for the industry with the support of all stakeholders”.
In January this year, IIFM standardized the framework for Shari’ah-compliant participation arrangements relating to trade in collaboration with the BAFT and released the IIFM-BAFT Master Participation Agreements (MPA’s) for unfunded and funded trade finance transactions. The MPA’s have been received positively by the industry and are expected to provide a boost to Shari’ah-complaint trade related activity by making transaction execution easier for financial institutions and enabling them to participate in large scale trade finance transactions.
Later this year, IIFM expects to come out with capital market related Sukuk Al Ijarah standard suite of documentation. The market consultation exercise with the global working group members concluded in April and the Shari’ah guidance and approval process will now commence. In second phase, IIFM intends to also develop Sukuk Al Ijarah standard documentation covering securitization market.
The working group consultation on Perpetual Tier 1 and Senior Unsecured Sukuk Al Mudarabah standard suite of documentation is currently ongoing and expected to be completed by end Q3 2019 after which Shari’ah guidance and approval exercise will commence.
IIFM 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. IIFM also intend to translate its standards into Bahasa Indonesia in future.
IIFM 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.
The IIFM 2018 audited accounts prepared by the auditor, Deloitte & Touche, were also approved by the Board at the meeting.
During 2019, IIFM will be holding an industry consultation meeting to assess the requirement for standardizing Islamic syndicated finance documentation. The meeting will possibly be organized in collaboration with a relevant international body. Also, this year, IIFM in coordination with its hedging standards joint partner ISDA will 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”, said Ijlal Ahmed Alvi, Chief Executive of IIFM.
As part of its 3 Year Strategic Plan (2017-2020), IIFM embarked on an awareness campaign on its Standards and in 2018 organized very successful seminars supported by central banks in Bahrain, Kuwait and Malaysia. IIFM has started 2019 with a seminar in the UAE which was held in June with the support of Dubai International Financial Centre Authority. Forthcoming seminars this year are set to take place in Oman & Malaysia in September and Indonesia in November in addition to the annual IIFM Bahrain seminar in December.
At the end of the meeting, the Chairman thanked the members of the Board, wishing everyone success and urging them to exert efforts in supporting the IIFM in order to achieve the aspirations of the Islamic banking industry, especially with regards to its sustainable development.