Thursday, 2nd July 2020 – Manama, Kingdom of Bahrain — The International Islamic Financial Market (IIFM), a global standard-setting body based in Bahrain announced today the release of French translated versions of six of its Standards relating to Islamic Liquidity Management and Risk Mitigation as part of its Strategic Plan (2017-2020) to expand IIFM’s Islamic financial documentation standardization initiatives and other services to new segments and areas.
Mr. Khalid Hamad, Chairman of IIFM said, “The French translated versions of IIFM’s six Standards will cater to the growing requirement of standardized documentation and product confirmations globally including jurisdictions where French is used as the legal language and is a clear reflection of the industry’s expansion. On behalf of IIFM Board of Directors and Members, I would like to thank the Islamic Development Bank (IsDB) for its valuable support to this important
initiative”.
Mr. Ijlal Ahmed Alvi, Chief Executive of IIFM said, “Standardization is a must for the advancement of Islamic finance industry in a transparent, efficient and harmonized manner and the completion of this first phase of the translation effort will indeed benefit users of IIFM Standards particularly in French speaking jurisdictions”.
The translation initiative is divided into several phases due to the voluminous nature of IIFM Standards and its supporting documents, with the aim to have French translated versions of all IIFM
published Standards.
The details of the newly French translated Standards are as follows:
1. Standard No. 1 – IIFM Master Agreements for Treasury Placement
This is the industry’s first ever globally standardized documentation and was developed for the purpose of liquidity management based on commonly used Commodity Murabahah
and Agency contracts. The widely acceptable Shari’ah-compliant mechanisms are defined in the Structure Memorandum.
2. Standard No. 2 – ISDA/IIFM Tahawwut (Hedging) Master Agreement
This is the industry’s first joint globally standardized documentation developed with collaboration between two International standard-setting organizations. It is a framework document designed to facilitate risk management functions of institutions active in Islamic finance. The risk mitigation product confirmations and credit support documentation fall under its terms and conditions. The documentation is supported by an explanatory memorandum.
3. Standard No. 5 – IIFM Unrestricted Interbank Master Investment Wakalah Agreement
This Standard documentation provides an alternative Islamic liquidity management instrument for institutions to transact without guaranteeing the principal and profit. The documentation is robust and provides operational, legal and Shari’ah certainty. It is supported by a detailed operational guidance memorandum.
4. Standards No. 8 and 9 – ISDA/IIFM Islamic Foreign Exchange Forward (Single Binding Wa’ad and Two Unilateral & Independent Wa’ad based structures)
IFX Forward templates are designed to be used for bilateral deliverable FX Forward transactions subject to a Tahawwut Master Agreement entered into between the parties. Its objective is to minimize the impact of currency rate fluctuation and volatility for stable business operations.
5. Standard No. 10 – ISDA/IIFM Islamic Credit Support Deed for Cash Collateral
This documentation governs the exchange of collateral for hedging transactions under the Tahawwut Master Agreement following the roll-out of variation margin requirements for
non-cleared transactions by regulators. Initial and variation margin exchange is part of G20 commitment to make global financial markets safer and more resilient.
The French translated versions of the six IIFM Standards and supporting documents are available under Published Standards on IIFM website