Go to Investment Europe homepage
  • Register for Investment Europe
  • Join Investment Europe’s LinkedIn group
  • Follow Investment Europe on Twitter
  • Investment Europe on your mobile
  • Investment Europe RSS feeds

IIFM and ISDA launch Islamic swap standard

  • By: William Clarke
  • 27 Mar 2012
  • Be the first to comment
Longevity swaps

The International Islamic Financial Market (IIFM) and the International Swaps and Derivatives Association (ISDA) have launched an ISDA/IIFM Mubadalatul Arbaah (Profit Rate Swap) product standard, to be used for Islamic hedging purposes.

The Mubadalatul Arbaah (MA) standard provides the industry with a framework for Islamic risk mitigation.

The standard, which allows bilateral exchange of profit streams from fixed rate to floating rate or vice versa, was developed under the guidance and approval of the IIFM Shari'ah Advisory Panel, in coordination with the external legal counsel Clifford Chance as well as market participants globally.

Khalid Hamad, chairman of IIFM and executive director of Banking Supervision at Central Bank of Bahrain said: "Islamic Financial Institutions (IFIs) have largely shown resilience in the current difficult financial environment and some are even going through an expansion phase. However, due to the inter-linkages with the global financial system, the balance sheet of IFIs are exposed to fluctuation in foreign currency rates and also cash flow mismatches due to fixed and floating reference rates. IIFM recognizes the importance of this critical segment at an early stage and undertook the challenge of developing global Islamic hedging standards in collaboration with ISDA. I am confident that such joint efforts will continue in the future for the benefit of the industry."

Robert G. Pickel, CEO at ISDA said the organisation "is pleased to continue its partnership with the IIFM as part of its own on-going efforts and commitment to building safe and efficient OTC hedging markets, across both global and Islamic financial markets."

"The ISDA/IIFM Tahawwut Master Agreement was a major milestone in the development of risk management in Islamic finance and the development of the ISDA/IIFM confirmation templates for Islamic Profit Rate Swaps is a natural step in the evolution and development of the market."

 

Not receiving your daily email?

Register here to make sure you receive the latest information from InvestmentEurope 

 

Visitors Comment

blog comments powered by Disqus

Market

Regions

European map
Benelux France Iberia Italy Germany Switzerland Austria Emerging Europe Scandinavia UK Ireland

Print Edition

Events

david-sugarman-polar-capital

Polar's Sugarman to speak on convertible bonds at Zurich Forum

David Sugarman, fund manager for Polar Capital, will discuss convertible bonds at the InvestmentEurope Pension Fund Forum held in Zurich on 15 May.

ana-harris-state-street

SSgA's Harris to discuss smart beta at Zurich Pension Forum

Anna Paula Harris, portfolio strategist for the global equity beta solutions group at State Street Global Advisors (SSgA), will address smart beta strategies at the InvestmentEurope Pension Forum to be held in Zurich on 15 May.