The leading Islamic finance standard-setting body is working on global rules for Shariah- compliant structured products to make them acceptable across borders as banks start selling more derivatives.
The International Islamic Financial Market, based in Manama, Bahrain, is developing a common template for hedging instruments such as currency swaps, Ijlal Ahmed Alvi, the agency’s chief executive officer, said in an e-mailed reply to questions on Jan. 12. Kuala Lumpur-based CIMB Islamic Bank Bhd., HSBC Amanah Malaysia Bhd. and Standard Chartered Saadiq Bhd. plan to offer new structured products this year.
Islamic banks need to ensure customers can understand the derivatives and that risk is limited after the financial crisis caused clients to lose money, according to Azrulnizam Abdul Aziz, chief executive officer at Standard Chartered Saadiq in Kuala Lumpur. There’s demand for the securities because investors want to diversify and expand their business, he said.
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