Nasdaq Dubai prepares Islamic finance products
Nasdaq Dubai is planning to open an Islamic finance exchange for trading Islamic sukuk bonds as well as conventional bonds.
Islamic finance has been growing in popularity in recent years – at a rate of 15-20% according to some estimates – and is currently worth approximately $1.3 trillion according to figures provided by Bloomberg.
The new Nasdaq Dubai platform will be available to institutional investors as well as high-net worth individuals and will be opened in the coming weeks. The tradable securities will comprise 12 sukuk and bonds with a nominal value of $10.9 billion. For the first time, prices of Nasdaq Dubai-listed sukuk and bonds will be visible on the same screen-based system via the exchange. Trades will be automatically routed for settlement at Euroclear Bank.
“The opening of the platform will be an important step in Dubai’s growth as a global leader in innovation in the Sukuk and bond sectors,” said Hamed Ali, acting chief executive at Nasdaq Dubai. “We look forward to creating further depth in the fixed income market and will collaborate with investors and other participants to steadily develop and enhance the platform.”
Traditionally, Islamic finance has suffered from differences between multiple countries and jurisdictions over definitions, conflicting standards and interpretations of Shariah law. In recent months, there have been efforts to reach agreement on international standards for Islamic finance, including a roundtable held in Kuala Lumpur in September and efforts by the International Organisation of Securities Commissions.
Nasdaq Dubai is a subsidiary of Dubai Financial Market, which holds a two-thrid stake. Borse Dubai owns one third. The firm is localed in the Dubai International Financial Centre.