Practitioners of Islamic finance will soon be able to refer to the first-ever standard template for an OTC, Sharia-compliant derivative, Reuters reported on Tuesday.
Simon Eedle, MD for Islamic Banking at Credit Agricole CIB, declared at a Reuters-hosted summit that the contract — which will be known as Ta’Hawwut — would be launched “imminently”.
But FT Alphaville has heard this before.
This template has been “imminent” for more than a year, and ISDA — the de facto voice of the derivatives industry — has been working on establishing standards for Sharia-compliant swaps for quite some time.
In fact, ISDA trumpeted in October that such global standards “may be published as soon as December [2009]“, Bloomberg reported last year.
And one month prior to that, Ijlal Alvi, chief executive of the International Islamic Financial Market, had expressed similar sentiments, telling Reuters he anticipated the master-contract would be approved by scholars by the end of the year.
In short, we’ll believe it when we see it.
In the meantime – Sharia-compliant derivative? Isn’t that a contradiction in terms?
Discuss.
Related links:
Islamic finance to the rescue? – FT Alphaville
The issue of shariah compliance and the Nakheel sukuk – FT Alphaville
S&P’s impeccable timing, Islamic finance edition – FT Alphaville
Sharing Risk dot Org blog – Excellent resource on Islamic finance, by Blake Gould