BANKING - Sharia banks may get hedge funding tool next year

Member countries of the International Islamic Financial Market (IIFM) may soon enjoy a hedging facility to reduce risks of financial transactions, officials say.

The IIFM’s Board of Directors agreed on Monday to implement a hedging facility for the sharia banking industry in the first half of next year amid global currency concerns.

Bank Indonesia’s director for sharia banking, Mulya Siregar, said that IIFM member countries would sign a master agreement, called a tahawwut agreement, to accommodate the hedging facility.

LEGAL - TAHAWWUT MASTER AGREEMENT - ISDA - Islamic derivatives slow to catch on in Gulf states

DUBAI: Islamic derivatives are still struggling to gain traction in the Gulf, six months after the launch of a much-touted over-the-counter contract aimed at creating a standard legal framework for hedging products.

Experts said the contract, known as the Tahawwut Master Agreement, in theory provides Islamic institutions with a simpler template for risk management that has been approved by syariah scholars.