05 May

Islamic Finance Opens Up new Avenues For Investors

The City of London and the UK are pioneers in creating suitable legal and regulatory frameworks and we provide the vast majority of professional and financial services to the global Islamic financial services industry. Most of the Islamic financial transactions are governed according to English common law with English law firms providing the bulk of the legal transactional, advisory and dispute resolution expertise. I have witnessed this first hand especially in my current role as partner and global head of Islamic Finance at McCarthy Denning.

The UK regulatory approach in the form of Finance Acts and regulatory standards of the FCA and PRA (formerly the FSA) are the benchmark for most of the well-renowned regulators in the Islamic financial markets. Most issuers prefer the London Stock Exchange for issuances of their Sukuk, the UK was the first Western and European sovereign to issue a Shariah-compliant government bond which was heavily oversubscribed. Moreover, the UK has the most variety of Islamic financial academic and training programmes which is assisting with the human capital required for the execution of Islamic financial deals.

The current and next opportunity for the UK and indeed the City of London is to focus more on establishing a niche such as Islamic FinTech (for which we already have the Islamic FinTech Panel), Islamic sustainable and green finance in line with the UN Sustainable Development Goals and the development of next generation of Shariah Scholars, who are the real gatekeepers, with expertise as multi-disciplinary professionals.

This will help in innovation without compromising the value proposition and bridge the gaps to make Islamic Finance a much bigger piece of the mainstream offering. There is an opportunity to provide a complete solution which looks at the entire value chain from micro and SMEs to wholesale corporate and governmental challenges.

In terms of niche areas, Islamic FinTech solutions can improve access to Islamic financial services through technology and contribute to a socially responsible development according to the Islamic finance principles. This can be for both the retail market and the corporate world. There is a huge demand for innovative solutions for car financing, home financing, and related insurance policies as well as for the fast-growing SME sector.

Originally published on www.financialdirector.co.uk


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