DIFC hosts IIFM Shari'ah Panel meeting on ISDA/ IIFM Tahawwut Master Agreement

IIFM-ISDA Agreement provides a framework and mechanism on hedging transactions undertaken by the Islamic finance industry

The Dubai International Financial Centre (DIFC) hosted a meeting of the Shari’ah Advisory Panel of the International Islamic Financial Market (IIFM) to obtain guidance from scholars and to explain the benefits of its Tahawwut (Hedging) Master Agreement.

The Agreement provides a framework and mechanism on hedging or risk management transactions that can be undertaken by the Islamic finance industry. It has been developed by the IIFM jointly with the International Swaps and Derivatives Association (ISDA).

The DIFC meeting focused on the key features and mechanics of the Tahawwut documentation, which the IIFM and ISDA have developed in consultation with market participants and under the guidance of the IIFM Shari’ah Panel.

The meeting was attended by scholars on the panel, legal counsel, officials from IIFM and ISDA, in addition to few market participants including Standard Chartered Saadiq.

Farhan Al Bastaki, Executive Director, Islamic Finance, DIFC Authority, welcomed the organisers and delegates to the IIFM meeting.

"While the world has been searching for an alternative to the conventional banking system deeply impacted by the global financial crisis, few have realised that a more stable, asset-backed and efficient system already exists. Islamic Finance has withstood the negative impact of the global financial crisis, proving its resilience, effectiveness and relevance to the global financial industry.

"The system is there, but its wider acceptability has to be created by spreading awareness as well as by providing depth to the market. The IIFM has been making significant efforts to provide depth to the Islamic finance industry such as through its latest framework for risk management. IIFM is widely acknowledged as the foremost body responsible for developing and setting global standards in Islamic finance documentation, products and processes.

"The DIFC is pleased to have partnered with the IIFM as part of its own on-going effort to promote and support the growth of the Islamic finance industry across all corners of the globe," Al Bastaki added.

Ijlal Alvi. IIFM CEO thanked DIFC on behalf of IIFM Board of Directors for its support. "The IIFM and DIFC have been co-operating to promote the Islamic finance industry in the region and the world. Apart from being a board member, the DIFC last year organised a very successful IIFM industry briefing session to reaffirm support for the Master Agreements for Treasury Placement (MATP).

"IIFM's primary focus is to standardize broader market products, documentation and processes, and provide elements vital to the sustainable growth of Islamic finance. Most importantly, it works to create a robust and transparent financial system.

The membership of the IIFM comprises of 47 Islamic finance institutions from across the world. Its board includes the DIFC, central banks of Bahrain, Brunei, Indonesia, Malaysia (LOFSA), Pakistan, Sudan and the Islamic Development Bank. Other financial institutions represented on IIFM board include Bank Islam Malaysia Berhad, European Islamic Investment Bank, Standard Chartered Bank Saadiq, National Bank of Kuwait, Kuwait Finance House-Bahrain, ABC Islamic Bank and Calyon Corporate and Investment Bank-Bahrain.

IIFM is a link between regulatory bodies and financial institutions and is driven by its permanent members and the market. It ascertains industry needs through dialogue and surveys, reviews the findings and appoints a project specific global working group that develops market standards under the guidance of IIFM Shari’ah Advisory Panel.