The meeting was attended by senior representatives from IDB, Central Bank of Bahrain, Central Bank of Sudan, Autoriti Monetari Brunei Darussalam, Labuan Financial Services Authority (Malaysia), Bank Indonesia, State Bank of Pakistan, ABC Islamic Bank-Bahrain, Bank Islam Malaysia Berhad, Kuwait Finance House-Bahrain.
IDB’s Vice President Finance, Dr. Abdul Aziz Al-Hinai, stated that IDB was pleased to host the Board of Directors of IIFM and that IDB would continue to support IIFM in its efforts. He thanked the Chairman and the Board Members for devoting their precious time for the development of the Islamic Financial Services Industry and hoped that they would continue to serve and guide the Industry towards standardization leading to further growth in the Islamic money and capital markets.
Khalid Hamad Abdul Rahman Hamad, Executive Director-Banking Supervision, Central Bank of Bahrain and Chairman of IIFM welcomed the Board members and thanked them for their foresightedness and guidance which has been instrumental in IIFM’s focus on standardized documentation and products for the Islamic Capital and Money Market. He specially thanked Dr. Ahmad Mohamed Ali Al Madani for his support to IIFM since its inception and also thanked him for hosting the meeting.
IIFM Chairman also thanked IDB’s Islamic Financial Services Department for its efforts in organizing the meeting as well as its support in IIFM initiatives.
The IIFM Chairman also thanked the member banks particularly Kuwait Finance House, Al Baraka Banking Group, Standard Chartered Saadiq, HSBC Amanah, Bank Islam Malaysia Berhad, Abu Dhabi Islamic Bank, ABC Islamic Bank, National Bank of Kuwait, Al Hilal Bank, Credit Agricole and others who actively participate in IIFM events and also provide valuable support to IIFM standardization initiatives.
The Board of Directors reviewed the completed documentation initiatives of IIFM as well as their implementation by the market particularly the Tahawwut (Hedging) Master Agreement. The Board noted the importance of these standardized documentation and the critical role such master agreements and standard products play in the unification of the Islamic finance industry.
Ijlal Ahmed Alvi, Chief Executive Officer of IIFM briefed the Board on the development of Islamic hedging products mainly covering the rate of return and currency risk and said the standard templates for key risk mitigation products are expected to be completed during early 2012. The Board appreciated IIFM efforts and hoped that IIFM will continue to play a leading role particularly in the Islamic Hedging and Liquidity management segments of the industry.
Alvi emphasized the need for legal framework which is critical for not only existing products and documentation but is also needed for the required innovation in liquidity management products such as collateralization, Sukuk standardization and other such tools.
Alvi also briefed the Board on the Inter-Bank Unrestricted Wakalah project which has been initiated with the formation of a core working group including prominent banks such as Abu Dhabi Islamic Bank, Kuwait Finance House, European Islamic Investment Bank, Al Hilal Bank, Bahrain Islamic Bank, Bank Islam Malaysia Berhad, HSBC Amanah and KPMG. The board hoped that the external legal counsel Norton Rose will carry out the assignment as per expectations and benefit to the industry.
Alvi explained that the Unrestricted Wakalah is often used by Islamic institutions in their liquidity management trades and hopes that the standardized documentation together with operational process and regulatory requirements will decrease the over reliance on Commodity Murabaha.
Alvi also briefed the Board on other projects currently being assessed by IIFM in the areas of Sukuk trading and standardization, collateralization and hopes that soon IIFM will be able to start the actual development work which is dependent on market consultation and its feedback.
The Board appreciated the support and valuable contribution of IIFM members, IIFM Shariah Advisory Panel and the Islamic Financial Services Industry in IIFM standardization efforts. The Board highlighted the importance of the Islamic Industry participants’ support in IIFM initiatives as implementation of standards is the key for the robust, transparent and sustainable development of the industry.
The Board of Directors welcomed the recognition of IIFM efforts in the unification of the industry with the receipt of the Most Outstanding Contribution to Islamic Finance Industry Award at the World Islamic Banking Conference 2011.