MANAMA: The International Islamic Financial Market (IIFM), a Bahrain-based standard-setting body, has initiated a dialogue with the industry to develop a solution on interbank lending rate (IBOR) replacement.
During their 44th meeting, the organisation’s board of directors held discussions on ongoing initiatives concerning global benchmark rate reforms and transition to Risk Free Rates (RFRs) and approved the initiatives recommended by the IIFM financing and hedging working groups.
The directors also studied ongoing standardisation initiatives which are positively supporting the systematic and robust expansion of the Islamic finance industry, and the Environmental, Social & Governance (ESG) related developments globally and the role IIFM may play in this area.
IIFM chairman Khalid Hamad said: “The G7 countries’ recent communique to enforce climate change related goals will have severe consequences, particularly on OIC countries’ financial stability, and the Islamic finance industry should start preparation to mitigate the ESG-related risk and develop transition related solutions towards low-carbon economy.”
He added that IIFM needs to create awareness in the industry and initiate assessment work as per its practically oriented approach.
Despite the continuation of the unprecedented situation caused by the Covid-19 pandemic, IIFM attuned workflow resulted in the timely publication of ‘IIFM Template Sukuk Al Mudarabah Standard Documentation’ for Tier 1 issuances and released the industry’s first white paper on ‘Global Benchmark Rate Reforms and Implications of IBOR Transition on Islamic Finance’.
IIFM also held numerous virtual working group meetings, webinar on launch of Sukuk Al Mudarabah Standard and a joint webinar on Islamic hedging for the Malaysian market during first half of 2021.
IIFM chief executive Ijlal Alvi said: “IIFM’s initiatives are always directed towards raising awareness on Islamic financial market requirements such as hedging and alternative to repo as well as taking a leading role in global financial market developments such as transformation to RFRs.”
He added: “IIFM Standards offer practical Sharia-compliant solutions to support the progression of the industry which provide immense benefits to market participants.”
During third quarter of 2021, IIFM, jointly with Dar Al Sharia, will begin offering practically oriented capacity building training to professionals on its published Standards and the 10th Edition of the annual IIFM Sukuk Report will also be published through a webinar event.
In the second half of 2021, IIFM plans to hold an industry-wide consultation meeting on standardisation of ‘Islamic Syndication documentation’, assessment exercise for which had already been underway at IIFM.
The organisation will also continue to assess standardisation of additional liquidity management products in consultation with the industry.
avinash@gdn.com.bh
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