Islamic firms urged not to hedge risks
Wednesday 12th May 2010, 2:30PM BST.
MOVES to make it easier for Sharia-compliant institutions to hedge their risks would be a bad step for the Islamic finance industry, according to one local banking figure.
Birch Assets managing director Toby Birch (pictured), who last year went on a lecture tour with the Canadian Islamic Congress to give an insight into Islamic finance and also appeared at an Islamic finance forum in Saudi Arabia, said the launch of a 42-page document for derivatives that comply with Muslim religious principles made for depressing reading.
The standardised documentation for derivative instruments that comply with Sharia, or Islamic law, which is known as the Tahawwut Master Agreement, is the creation of the International Islamic Financial Market and the International Swaps and Derivatives Association.
The two bodies are now doing a series of workshops to encourage Islamic banks to adopt it.
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