IIFM promotes Islamic alternative to repo
10 February 2015 London
Image: Shutterstock
The International Islamic Financial Market’s Master Collateralised Murabahah (MCM) Agreement is a viable Islamic alternative to repo, according to speakers at a London event to raise awareness of the agreement.
The workshop was hosted by Bahrain-based International Islamic Financial Market (IIFM) and the International Capital Markets Association, and was attended by bankers, lawyers, and other market participants.
Presentations and panel discussions outlined how the MCM Agreement can help to facilitate liquidity management through Shari’ah compliant transactions.
The agreement is a collateral arrangement based on Shari’ah principles. Under the agreement, the seller acts as financier, and security will be taken for each deferred payment. The buyer acts as obligor and will grant security. In addition, different collateral must be used for each separate agreement.
Workshop participants also discussed how the agreement allows Islamic financial institutions, and other corporates and institutions, to better utilise their Sukuk portfolios and approved Islamic instruments, such as equities.
David Hiscock, senior director and deputy head of market practice and regulatory policy at ICMA introduced the session, saying: “ICMA has a long history of successfully introducing standardisation into repo markets, notably through the Global Master Repurchase Agreement (GMRA), and promoting a wider understanding of repo and collateral; in line with this we commend IIFM on their production of this new master agreement.”
CEO of IIFM Ijlal Ahmed Alvi said: “This standard documentation is the culmination of efforts by a number of stakeholders to develop a unified template which, at the moment, is the best possible Islamic alternative to repo. We are thankful to ICMA for hosting this timely workshop to create awareness among our respective members and the wider Islamic finance community.”
The workshop was hosted by Bahrain-based International Islamic Financial Market (IIFM) and the International Capital Markets Association, and was attended by bankers, lawyers, and other market participants.
Presentations and panel discussions outlined how the MCM Agreement can help to facilitate liquidity management through Shari’ah compliant transactions.
The agreement is a collateral arrangement based on Shari’ah principles. Under the agreement, the seller acts as financier, and security will be taken for each deferred payment. The buyer acts as obligor and will grant security. In addition, different collateral must be used for each separate agreement.
Workshop participants also discussed how the agreement allows Islamic financial institutions, and other corporates and institutions, to better utilise their Sukuk portfolios and approved Islamic instruments, such as equities.
David Hiscock, senior director and deputy head of market practice and regulatory policy at ICMA introduced the session, saying: “ICMA has a long history of successfully introducing standardisation into repo markets, notably through the Global Master Repurchase Agreement (GMRA), and promoting a wider understanding of repo and collateral; in line with this we commend IIFM on their production of this new master agreement.”
CEO of IIFM Ijlal Ahmed Alvi said: “This standard documentation is the culmination of efforts by a number of stakeholders to develop a unified template which, at the moment, is the best possible Islamic alternative to repo. We are thankful to ICMA for hosting this timely workshop to create awareness among our respective members and the wider Islamic finance community.”
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