1. Asset Classes
  2. Interest Rate
  3. Islamic Finance

Islamic Finance

Asset Classes
Interest Rate March 1, 2010
2  min.read

Global Staff Contact: Peter Werner — pwerner@isda.org

The ISDA Islamic Finance WG has been set up to discuss documentation as well as legal and regulatory issues affecting trading in OTC derivatives transactions with counterparties in Islamic jurisdictions.

Documentation: On 27th March 2012, ISDA and IIFM announced the launch of the ISDA/IIFM Mubadalatul Arbaah (Profit Rate Swap) product standard to be used for Islamic hedging purposes. The Mubadalatul Arbaah (MA) standard follows on from the “ISDA/IIFM Tahawwut (Hedging) Master Agreement” and provides the industry with a framework for Islamic risk mitigation. The launch of the Tahawwut Master Agreement as the template for Shari’ah-compliant risk management was officially announced at a press conference hosted by Central Bank of Bahrain in March 2010.

The following templates have been published:

  • DFT Terms confirmation for the Fixed Profit Rate Leg of the PRS (Two Sales Structure)
  • DFT Terms confirmation for the Floating Profit Rate Leg of the PRS (Two Sales Structure)
  • DFT Terms confirmation for the Fixed Profit Rate Leg of the PRS (Single Sale Structure)
  • DFT Terms confirmation for the Floating Profit Rate Leg of the PRS (Single Sale Structure)

The templates can be downloaded here.

Documentation: On 1 March 2010, ISDA and IIFM (International Islamic Financial Market) published the ISDA/IIFM Tahawwut (Hedging) Master Agreement. The official press release is posted here. The Shariah review and approval process has been done by the scholars on the IIFM Shariah Advisory Panel. Ancillary documents and the additional templates specific to Islamic Finance hedging products are under discussion. The ISDA/IIFM Tahawwut (Hedging) Master Agreement can be downloaded here.

  1. The GCC region
  2. The wider Middle Eastern region
  3. The Far East

ISDA is in contact with various regulators and legislators in the GCC region and beyond in the context of improving the legal framework for derivatives generally and the enforceability of close-out netting and financial collateral arrangements in particular.

  Last Updated: March 1, 2010

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