The Bahrain-based International Islamic Financial Market (IIFM) is spearheading the development of a master agreement for Islamic hedging, it was announced yesterday.
It also includes a master agreement for Islamic treasury Murabaha contracts and standardised documentation for sukuk and a Sharia-compliant repurchase agreement (Repo).
Progress on the three projects will be the focus of a briefing conference being organised by the IIFM in London on Monday.
More than 70 participants representing the UK Financial Services Authority, HM Treasury, London Stock Exchange, London Metal Exchange, legal firms and UK-based Islamic and conventional financial institutions will be taking part in the event.
The industry briefing session, which is sponsored by the European Islamic Investment Bank and Calyon Corporate and Investment Bank, follows the 18th meeting of the IIFM board of directors.
The briefing session will provide guidance to a selective group of industry experts of Islamic finance on industry trends and future directions as well as project specific presentations.
The projects were agreed with the industry during briefing sessions held in Bahrain and London last year.
“IIFM has been working hard to advance a number of key projects, which are critical to the next phase of development of a truly globalised Islamic finance industry and Islamic capital markets,” said IIFM chief executive officer Ijlal Alvi.
The centre piece of IIFM action plan is the master agreement for Islamic hedging, a key tool in risk management, which the IIFM is working on in conjunction with the International Swaps and Derivatives Association.
The two organisations are jointly developing the agreement for documenting privately negotiated Sharia-compliant hedging transactions.
The IIFM is working with the International Capital Market Association on development requirements for Islamic primary and secondary market instruments, including a Sharia-compliant Repo.
The work also includes developing recommendations, standard documentation, standard language and guidance for sukuk issuance in primary market; rules and recommendations for secondary market transactions involving sukuk and other Islamic financial instruments as well as the provision of on-line transaction matching, reporting and confirmation services for sukuk and other Islamic financial instruments.
IIFM has commissioned a prominent international legal firm to develop the relevant legal documents.