Growth of the Islamic finance industry leads to need for better disclosures
Sep 19, 2012
The Islamic Financial Services Board (IFSB) has posted to its website a report from a high-level roundtable on 'Disclosure Requirements for Islamic Capital Market Products' organised by the IFSB, the International Organisation of Securities Commissions (IOSCO) and the Securities Commission Malaysia. The roundtable was to be a first step towards the development of international regulatory standards and best practices relating to disclosure requirements for Islamic capital market products.
The Islamic capital market has expanded rapidly over the last years and cross-border financing and investment are on the increase. They have outpaced the development of robust regulatory and disclosure practices. The roundtable therefore discussed the need to achieve improved and better converged disclosure requirements across jurisdictions to achieve greater transparency and comparability leading to better investor protection and to a healthy and sustainable growth and a reliable regulation of the Islamic capital market.
All participants agreed that this issue is best addressed from a cross-jurisdictional perspective and the hope is that the collaboration between IFSB and IOSCO will facilitate a process leading to a set of practices that could be harmonised or mutually agreed upon. The participants also discussed the risks and challenges arising from inadequate disclosures in the area of Sukuk and Islamic Collective Investment Schemes and identified potential approaches that could be adopted by the standard setters.