IIFM to issue key standards on trade finance

Manama: Bahrain-based International Islamic Financial Market (IIFM), a standard-setting body, will soon issue two key standards relating to trade finance, its chairman has said.

Khalid Hamad, executive director of banking supervision at Central Bank of Bahrain and chairman of IIFM, said the two standards are being launched jointly with the Bankers Association of Finance and Trade, and with the assistance and collaboration of the International Trade and Finance Corporation, which is the trade finance arm of the Islamic Development Bank.

“These new standards are the Sharia-compliant version of the Risk Participation Agreement used widely by conventional banks in trade finance. But, unlike the single conventional agreement, these standards will cover both funded and unfunded participation agreements as two distinct Sharia-compliant initiatives,” said the official during the opening of the IIFM Awareness Seminar yesterday that officially kick-started the 25th Annual World Islamic Banking Conference (WIBC).

“There are a few other initiatives under consideration as ‘work-in-progress’ at the IIFM. One of them is the project for finalising the master agreement for gold trading, which is being undertaken jointly with the World Gold Council based in the US and the London Bullion Markets Association based in the UK. The master agreement is used by international banks and accommodates standard trading for all gold products,” he added.

Stressing on the urgent need for widespread adoption of standards, Mr Hamad said, “IIFM has gained much credibility and reached a stage of maturity with sound achievements to date, however, there is still a burning need to get its standards to be used more actively by wider market players which can only happen if there is strong endorsement from regulators, particularly those in Islamic banking markets across GCC and Asia.”

Addressing a packed audience of 300 delegates at the ART Rotana Hotel in Amwaj Islands, Mr Hamad discussed IIFM’s three-year strategic plan (2017-2020) and noted that over the past 12 years IIFM had issued 10 standards, seven of which, relate to hedging and three relating to liquidity management.

The opening address at the 9th annual IIFM pre-conference seminar was followed by an overview of IIFM’s Sharia-compliant financial documentation and product confirmation standards.

Source: http://www.gdnonline.com/Details/442977

 

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