Bahrain's IIFM drawing up Islamic finance contract

Bahrain-based financial regulator the International Islamic Financial Market (IIFM) said on Monday it is in the process of completing the first-ever standardised contract in Islamic finance, which can be used by Islamic financial institutions worldwide.

IIFM, which focuses on developing global Islamic capital and money markets, said the Master Agreement for Treasury Placement (MATP) aims to significantly facilitate commodity Murabaha transactions, a market worth around $100 billion.

"The IIFM is delighted to have spearheaded such a project to develop a contract which will cover over 90% of commodity Murabaha transactions in numerous jurisdictions across the world," said Khalid Hamad, IIFM chairman, in a statement.

"In addition, the utilisation of a standardised agreement will enable more transparency, robustness and consistency in Islamic financial transactions."

MATP is currently awaiting final review by prominent sharia scholars, and is expected to gain wide acceptability because commodity Murabaha transactions are the most commonly used Islamic money market product, the IIFM said.

IIFM, founded in 2002, was set up by the central banks and monetary agencies of Bahrain, Malaysia, Brunei, Indonesia and Sudan, as well as the Islamic Development Bank to facilitate the development of international Islamic capital and money markets.

The IIFM also said it was working on several other market development initiatives, which are aimed at the development of a globalised Islamic finance industry and Islamic capital markets.

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