IFSB to de­velop stan­dards for Is­lamic cap­i­tal mar­kets

Board to boost reg­u­la­tory con­sis­tency

Kuwait Times - - BUSINESS -

KUALA LUMPUR: The Kuala Lumpur-based Is­lamic Fi­nan­cial Ser­vices Board (IFSB) plans to de­velop guid­ing prin­ci­ples for cap­i­tal mar­kets and in­sur­ance, seek­ing to en­cour­age reg­u­la­tory con­sis­tency across new and es­tab­lished mar­kets, its sec­re­tary gen­eral said. The new guide­lines from the 188-mem­ber IFSB, one of the main stan­dard-set­ting bod­ies for Is­lamic fi­nance, will com­ple­ment ex­ist­ing ones which cover com­mer­cial bank­ing.

A wider set of stan­dards could as­sist the In­ter­na­tional Mon­e­tary Fund which plans to in­clude Is­lamic fi­nance in its sur­veil­lance work, known as the Fi­nan­cial Sec­tor As­sess­ment Pro­gram (FSAP).

“Be­fore the FSAP there has to be a set of core prin­ci­ples and that really is the in­stru­ment that we feel is go­ing to point the way and fa­cil­i­tate con­sis­tency across bor­ders,” IFSB sec­re­tary-gen­eral Jaseem Ahmed told Reuters. The stan­dards on cap­i­tal mar­kets and Is­lamic in­sur­ance (taka­ful) would c mple­ment reg­u­la­tory guidance from the In­ter­na­tional Or­ga­ni­za­tion of Se­cu­ri­ties Com­mis­sions (IOSCO) and the In­ter­na­tional As­so­ci­a­tion of In­sur­ance Su­per­vi­sors (IAIS).

The plans will be sub­mit­ted to the IFSB’s coun­cil in De­cem­ber as part of its sec­ond strate­gic per­for­mance plan for 2016-2018, said Ahmed. Such ef­forts come at a time when Is­lamic fi­nance is gain­ing wider promi­nence as the in­dus­try takes a greater share of the fi­nan­cial sec­tor in sev­eral ma­jor­i­tyMus­lim coun­tries.

Is­lamic fi­nance, which bans in­ter­est pay­ments and pure mon­e­tary spec­u­la­tion, is now sys­tem­i­cally im­por­tant in 10 coun­tries where Is­lamic banks hold over 15 per­cent of bank­ing as­sets, in­clud­ing Kuwait, Malaysia and Qatar. Coun­tries like Morocco are in­tro­duc­ing Is­lamic fi­nance for the first time, so com­pre­hen­sive reg­u­la­tory guidance would aid in con­ver­gence be­tween new and ma­ture mar­kets, said Ahmed.

“In the ab­sence of guide­lines, prac­tices can de­velop which are not in­formed. This is not de­sir­able.” Founded in 2002, the IFSB’s ini­tial ef­forts have fo­cused on win­ning a wide mem­ber­ship base, leav­ing im­ple­men­ta­tion and en­force­ment to na­tional reg­u­la­tors to de­cide. Now, how­ever, the IFSB is is­su­ing more de­tailed guidance in re­sponse to the global fi­nan­cial cri­sis, and a trend to­wards tight­en­ing reg­u­la­tion of con­ven­tional fi­nan­cial mar­kets.

This month the IFSB re­leased draft guide­lines on Is­lamic rein­sur­ance and a joint pa­per with the IAIS on Is­lamic mi­croin­sur­ance. A study by the IFSB found that there is strong de­mand among reg­u­la­tors for sup­port to im­ple­ment its stan­dards, while the de­gree of im­ple­men­ta­tion is linked to a range of fac­tors. It noted Bahrain as hav­ing one of the most de­tailed con­sul­ta­tions for in­tro­duc­ing stan­dards, while in In­done­sia im­ple­men­ta­tion re­lies on in­put from the pri­vate sec­tor. In Pak­istan the in­dus­try is sub­stan­tially de­pen­dent on units of con­ven­tional banks known as Is­lamic win­dows, while IFSB stan­dards say lit­tle about how they should be ap­plied to them. —Reuters

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.