IFSB proposes new standards for Islamic finance

The Islamic Financial Services Board (IFSB) has issued three draft proposals concerning the regulation of sharia-compliant capital markets products.

The three drafts cover the supervisory review process of Islamic insurance (takaful), core principles for Islamic finance regulation, and a revised standard on disclosure and transparency for institutions offering Islamic finance.

The Malaysia-based IFSB, one of the main standards-setting bodies in Islamic finance, has set a two-month consultation period for the market and will be holding a public hearing on April 10 in Indonesia to explain the proposals in more detail.

The move is intended to bring more clarity to the question of sharia non-compliance in certain Islamic products, notably the growing market for sukuk, or Islamic bonds, in which disputes between issuers and investors have arisen.

One particularly prominent case involves the UAE-based Dana Gas which in 2017 refused to redeem $700 million of Islamic bonds on grounds they were no longer sharia-compliant. In February, a UK court ruled in favour of the bondholders.

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