Category Archives: United States of America

Scholars and bankers invited at George Washington University to discuss nuances of Islamic finance

Scholars and bankers invited at George Washington University to discuss nuances of Islamic finance

The event featured five distinguished scholars and experts in the field of Islamic finance. They included Prof. Frank Vogel, senior fellow and head of Muslim World Law and Islamic Finance, Institution Quraysh for Law and Policy and Umar Moghul, Partner at Murtha Cullina LLP and co-chair of the firm’s Islamic Finance and Investments Group.

Yusuf Talal deLorenzo, chief Shariah officer at Shariah Capital, Aamir Rehman, managing director at Fajr Capital Limited and Ibrahim Warde, adjunct professor of International Business at the Fletcher School of Law and Diplomacy, Tufts University, were the others.

The panelists addressed a several hundred attendees on the various aspects of contemporary Islamic finance such as its historical legacy, the compatibility of Shariah-compliant institutions with US law, derivative instruments and the development of sukuk in the Gulf, Shariah financial regulation and practice in the GCC (Gulf Cooperation Council) and Islamic finance in the light of the recent financial crisis.

It also addressed Shariah financial regulation, how the rise of Gulf capital is affecting financial markets and how it should be regulated, as well as the compatibility of Shariah institutions with US law and regulation and the objections of Shariah scholars challenging the permissibility of derivatives under Islamic Law.

The discussions were moderated by Jean-Francois Seznec, visiting associate professor at Georgetown University’s Center for Contemporary Arab Studies.

Regarding the question of sukuk in the Gulf, DeLorenzo said ownership is an important issue for Shariah scholars to understand.

“Ownership is always a sticky subject and it is not always a failure of the Shariah advisers when ownership and sukuk is questioned,” he said.

DeLorenzo, wrote the introduction to Islamic bonds, a book that introduced sukuk to the world’s Islamic capital markets as well as a three volume Compendium of Legal Opinions on the operations of Islamic banks, the first English/Arabic reference on fatwas issued by Shariah boards.

One clear lesson, he said, “is the need for more and more diligence on the business side.”

Questioned on whether sukuk is a sound investment, he said there are serious Shariah issues that need to be addressed. “There are tensions between GCC investors and Malaysian investors who have different philosophies in the jurisprudence.”

He said that sukuk need to have a viable trading market.

“We need to confront these issues. The tensions need to be resolved before real trading can take place.

“Sukuk are hybrids, some look like equity, others like debt. They need to be traded and exchanged, and unless everyone understands the rules there will be a lot of confusion in the marketplace and people will leave. There is a need to deal with this sooner than later.”

DeLorenzo’s 30-year career as a scholar of Islamic Transactional Law was a front-page story in the Wall Street Journal in 2007.

“It’s a rules-based business; people need to understand that, whether they’re in Hong Kong or Chicago, and the way to do this is through an exchange of information,” he said.

“Many of the high profile sukuk defaults have taken place as the result of poor business decisions, not Shariah.”

He said the problem was that the “press picks up on a sukuk default and then blames it on Shariah. We need to explain it better.”

The expert said a new generation of sukuk coming to the market also needs to be closely examined.

“My feeling is that the issuers need to be more transparent to investors, and feel the same way about Shariah boards. We need to be careful about managing perceptions.”

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Report: North America next big growth market for Islamic Finance

Report: North America next big growth market for Islamic Finance

As world economies struggle to move from recession to recovery, Islamic finance is being hailed as a possible alternative to risk-prone conventional financial services – even in the capitalist heartlands of the USA and Canada. Extensive evidence of this shift in action is presented in a new report called Islamic Finance in North America 2009 published tomorrow by Yasaar Media and co-published by Codexa Capital, UM Financial Group, King & Spalding, and Doha Islamic.

The report explores for the first time the true depth of penetration of Islamic finance in both the USA and Canada and concludes that both core North American markets could be set for a boom.

According to the report Islamic finance in North America has developed along two quite separate paths. The first path focuses on retail Islamic finance and centres mostly on home financing products and credit cards. The second path involves a number of high profile GCC-based Islamic investment banks and their deployment of hundreds of millions of dollars in private equity and real estate developments in North America.

With many global markets showing the first signs of emerging from the worst of the financial crisis, North America could be set to witness a surge in Islamic finance activity along both paths as institutions and individuals look for alternative financing propositions that shun the use of excessive risk. The significant inroads that Islamic finance has made in both the USA and Canada look set to be expanded upon in the years ahead.

Paul McNamara, editorial director of Yasaar Media, says, ‘Investors and businesses alike are still smarting from the worst ravages of the global recession and they are looking for a lower-risk alternative. Islamic financing structures are inherently more risk averse than their conventional counterparts and as a result such structures are now being studied closely in all sorts of markets – including highly sophisticated markets like those of North America’.

These important markets are examined for the first time as growth areas for Islamic finance. ‘Both the USA and Canada are home to some very experienced Islamic finance firms – both on the financial and the legal side – and many market observers are now watching closely to see how they will help accelerate development of Shariah financing in North America. These are lucrative markets and it makes sense that GCC- and Malaysia-based Islamic finance houses are watching them with great interest’, according to Mr. McNamara. 

Islamic home finance offers new solutions in this economy: Yusuf Talal DeLorenzo

Islamic home finance offers new solutions in this economy: Yusuf Talal DeLorenzo

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The business model and growth of the Islamic finance sector – the only financial system in the world today that is based on the teachings of a major religion – may present new opportunities for American households – Muslims and non-Muslims alike.

The Islamic home financing sector is active in nearly 40 states in the United States. While operating on an interest-free business model, Islamic home financial institutions are compatible in every way with modern capitalism, just like conventional financial institutions.

There are differences, however.

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Dow Jones indexes named best Shari’ah-compliant index provider

Dow Jones indexes named best Shari’ah-compliant index provider

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Dow Jones Indexes, a leading global index provider, today announced that it has been named “Best Shari’ah-Compliant Index Provider” by Global Finance magazine for the second consecutive year.

The Global Finance awards for World’s Best Islamic Financial Institutions honor those financial institutions that make significant contributions to the growth of Islamic finance and successfully meet their clients’ needs for Shari’ah-compliant products, while creating the foundation for continued fast growth in the future.

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Islamic Home Insurance Launched in the US

Islamic Home Insurance Launched in the US

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When Babar Saeed heard about the first Islamic insurance product in the United States his first response was, “Tell me more and how can I sign up?”  It’s a fact that true Shari’ah compliant insurance has finally arrived in the United States after various groups tried for 25 years. 

But now, building on their innovative track record, Zayan has successfully launched the first Islamic homeowner’s insurance program in the US.  Takaful is the final step in completing the range of Shari’ah compliant financial services offered in the United States and an impressive milestone for American Muslims.   

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