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Are Contract for Differences #CFD / #Binary Options halal? Well, no. Why?

Many Muslims contacted me in the last years with one single repeating question: Are CFD and/or Binary Options halal meaning permissible in Islam? There are indeed forex brokers offering so called Islamic accounts avoiding outright interest. But still: A contract of difference does not involve the ownership of any underlying (currency, stocks etc.) hence money against money is exchanged in different amounts - this is the most simple test for the prohibited Riba. Any Muslim receiving such offers should therefore insist of receiving the Fatwa and if not provided leave out.

The intention on those trading activities everyone can ask himself; mostly it will be akin to gambling and this on top of the fact that the trading activity itself is a zero sum game; meaning what one wins another looses, which rules out again to participate in such business. It does not do any better that aside from luck the outcome is influenced by know how - the same is true for classical money games as Poker or Backgammon. Still nobody would classify Poker therefore as halal.

IFSB issues Exposure Draft on Disclosure Requirements for Islamic Capital Market Products

The Islamic Financial Services Board (IFSB) has issued its Exposure Draft of Guiding Principles On Disclosure Requirements for Islamic Capital Market Products (ED-19) for Public Consultation running from 31 October 2016 to 31 December 2016. ED-19 categorises a set of general principles that are common to the disclosure of both Sukuk and Islamic Collective Investment Schemes (ICIS), as well as specific principles applicable to each sector. The ED outlines disclosure requirements for Sukuk and ICIS, covering the main stages of disclosure and point-of-sale disclosure. The IFSB will organise a Roundtable on Disclosure Requirements on 30 November 2016 in Kuala Lumpur, Malaysia and a Public Hearing on ED-19 on 13 December 2016 in Cairo, Egypt. ED-19 will be revised based on the written and oral feedback received during the public consultation process and is planned to be submitted for final approval of the IFSB Council in April 2017.

Islamic finance to increase female economic participation: Minister

According to #Indonesian Economic Coordinating Minister Darmin Nasution, the development of the country’s sharia finance industry will increase female participation in the economy. He said Indonesian fashion and halal cosmetics were among the well-performing industries and most businesspeople in the two industries were women. Indonesia is one of the top five Islamic fashion industries in the world, with a total spending of US$12.7 billion annually. It is also in the world's top five regarding the sharia cosmetics/pharmaceutical industry with an average spending of $4.8 billion per year, according to data from Bank Indonesia (BI). BI deputy governor Hendar said inspite of the global slowdown, Indonesia's sharia industry was still giving positive signals.

#Turkey seeks huge piece of Islamic finance pie

Deputy Prime minister in Charge of the Economy Mehmet Simsek said the size of the Islamic banking sector globally was projected to grow to $3.5 trillion in the next five years and Turkey aimed to manage a sizeable portion of this huge sector. He said the government was committed to help the sector thrive in Turkey. Furthermore, he indicated that the total size of assets of participation banks reached $183.93 billion by the end of 2015. Pointing out that the participation banks' share in the overall banking sector was 5.1%, he stressed the goal set by the representative of the sector was to attain 15% by 2025. The Turkish Treasury elaborated on the action plan called "Strengthening Interest-free Finance and Participation Banking" as a component of the Istanbul International Financial Center (IFC Istanbul) program. It was decided that the board would work on the issues raised at the meeting to develop the interest-free finance sector.

S&P's Not Yet Ready to Upgrade #Indonesia's #Rating from Junk

S&P Global Ratings may not be ready to upgrade Indonesia’s credit rating from junk, concerned by rising bad debts and risks to the growth outlook. Indonesia failed in June to win an upgrade from S&P, which rates the nation’s debt at BB+ with a positive outlook. S&P said at the time that while the country’s fiscal framework had improved, it still faced challenges on its budget performance. Josua Pardede, an economist at PT Bank Permata in Jakarta, said Indonesia still faces fiscal risks. He estimated the tax shortfall for this year will be more than 200 trillion rupiah ($15 billion), causing the budget deficit to widen to around 2.7% of gross domestic product. The government has a deficit cap of 3% of GDP. The ratings company will meet with Indonesian Finance Minister Sri Mulyani Indrawati within the next few weeks before it makes its next assessment due in December. S&P is the last of the three main credit-rating companies to keep Indonesia on junk status.

President of #Kazakhstan commends cooperation with IsDB Group

The President of Kazakhstan, Nursultan Nazarbayev met with the President of the Islamic Development Bank (IsDB), Dr. Bandar Hajjar, on an official visit to the Kingdom of Saudi Arabia. President Nazarbayev praised the cooperation between IsDB and his country and congratulated Dr. Hajjar on his recent assumption of duties as the new IsDB Group President. President Nazarbayev plans to launch the program 100 Steps, which is designed to introduce structural and economic reforms to Kazakhstan. The program also envisages the launching of Astana International Financial Center as a center of excellence for financial services at regional and global level. President Nazarbayev called on IsDB to provide technical support in the fields of development and Islamic finance. Dr. Hajjar assured that the IsDB Group would provide the required technical assistance to support President Nazarbayev’s initiatives.

Christians and Muslims work together on pioneering ethical finance plans

The Church of Scotland and Islamic Finance Council UK are meeting at a private round table in the British Parliament. As part of the interfaith initiative for a more socially responsible financial system, faith leaders, parliamentarians and finance practitioners gather to agree a shared values framework. The joint venture was launched earlier this year in response to the systemic failure and non-sustainability of the current financial model. The event is the second in a series of three workshops. The first reviewed the theological and philosophical underpinnings of Christianity and Islam in order to identify commonalities. At the second workshop the shared values framework will be reviewed and refined before participants explore the practical obstacles to realising ethical finance. Omar Shaikh of the Islamic Finance Council UK said that bringing the debate to the heart of London sends a strong international message that faith communities can work together for the greater good of society.

IFSB launches annual survey on implementation of IFSB Standards

The Islamic Financial Services Board (IFSB) launched its annual Survey on the Implementation of IFSB Standards. The Survey is directed to the member regulatory and supervisory authorities (RSAs) to assess their progress in implementing the IFSB Standards. According to Jaseem Ahmed, Secretary-General of the IFSB, the Survey is useful in providing feedback on the progress and major constrains faced by the authorities. In 2015 a total of 39 RSAs from 27 countries responded and overall 18 RSAs have implemented at least one IFSB standard. In the banking sector, nine RSAs have already implemented more than 50% of the standards. The results of the Implementation Survey 2016 are planned to be presented to the IFSB Technical Committee and Council in early 2017.

Faith-Based Investor Group Calls for Drugmakers to Be Transparent on Pricing

Members of the Interfaith Center on Corporate Responsibility (ICCR) are asking 17 American drug companies to be more transparent about when and why they raise prices. The investors say rising costs are putting prescription drugs out of reach for many patients. The ICCR hopes the proposals are listed in company proxy statements and put to shareholder votes at annual meetings in spring 2017. Some state legislatures have already introduced bills requiring companies to justify price increases. ICCR member Catherine Rowan hopes they get enough votes to prod companies to adopt pricing-transparency policies. She added that congressional committees have called some pharmaceutical chief executives to testify and the legislative pressures are going to persist.

#UK lifts sanctions on key #Iranian bank

The British government has announced that it has removed Bank Saderat Iran (BSI) from its list of sanctioned entities. The decision to delist the bank was in line with the amended regulations by the European Union regarding the lifting of sanctions against Iran. The regulations required the sanctions against the BSI to be maintained until 22 October 2016. Britain has previously lifted sanctions against three other Iranian banks. In January, the Bank of England announced that it had reactivated the licenses of Melli Bank, Persia International Bank and Bank Sepah International. This followed the implementation of a nuclear deal between Iran and the P5+1 group of countries. Iran agreed to restrict certain aspects of its nuclear energy activities in return for measures by the P5+1 to remove certain economic sanctions imposed against the country.

Finance Ministry initiates works on legal infrastructure of Istanbul's Finance Center

#Turkey's Finance Minister Naci Agbal said the ministry initiated studies on a draft law on the Istanbul International Finance Center (IIFC). Agbal stated that the government introduced new financial instruments step by step, including the founding of the Sovereign Welfare Fund (SWF), real estate certificates and Islamic finance tools, in an attempt to intensify Turkey's financial markets. The draft law on the IIFC aims to offer opportunities to financial players and attract international financial institutions to Turkey. At the IIFC 50,000 people will be employed and it will have 25,000 daily visitors once opened. The joint infrastructure work of the financial center includes an administrative building, a police station, a health center, fire department, continuing education center, various academic courses, a mosque, a nursery, an underground parking lot and a trestle.

#Sukuk company granted #tax exemption

In #Pakistan the Federal Board of Revenue (FBR) allowed exemption from withholding tax on purchase of immovable property by the Second Pakistan International Sukuk Company. The company has already enjoyed several exemption and concessions, exemption from levy of various advance taxes, profit on debt and tax on income from property. This further exemption was granted to strengthen the Islamic debt market by attracting investors by grant of tax concessions.

Regulating #Indonesia’s Buzzing #Fintech Space

The Indonesian Financial Services Authority (OJK) notes that there are currently 71 active fintech startups in the country. These startups provide diverse products and services, including payment gateways, lending, banking services, insurance services, pawn shops, or online financial advisory. This has also led the OJK to pay more attention to the sector, with hopes of developing appropriate regulation. The regulations that will be issued by OJK should not be too rigid, so as to provide a balanced climate. Some regulatory concerns include business licensing, business operation, governance, supervision and inspection, reporting obligations, and equities. All in all, the seriousness of OJK and other relevant parties to provide supportive regulations will hopefully bring strategic action.

Dubai launches international Islamic endowments body

A group of Islamic endowments, or awqaf, and the Dubai government have launched an international organization tasked with improving investments made in the sector. The Awqaf International Organization (AIO) aims to coordinate commercial efforts of sharia-compliant charitable foundations from around the globe. They have amassed huge holdings of real estate, commercial enterprises and other assets, which according to a Dubai government estimate total $1 trillion globally. Management of some awqaf assets has been criticised as inefficient. Now AIO has also been tasked with recommending unified templates for legal frameworks and overseeing applications of sharia standards in accounting, reviewing, and governance, said Husain Benyounis, secretary general of Awqaf New Zealand. The founding members of AIO include awqaf from South Africa, Canada, New Zealand, Australia, the U.S., and the emirates of Dubai and Sharjah.

Religious investors lose faith in Wells Fargo after scandal

A group of nuns and other religiously-affiliated investors have lost faith in Wells Fargo and filed a shareholder resolution calling on the bank to report on a fake accounts scandal that led to a $190 million settlement. The bank employees opened as many as 2 million checking, savings and credit card accounts without the customers' permission in order to meet sales quotas. The San Francisco-based bank said it would provide more specifics on areas like its risk controls, but that did not happen. Wells Fargo's board has taken some steps since the settlement to address concerns, but the religious shareholders now say they need more changes. For instance another resolution filed by the Unitarian Universalist Association calls on Wells Fargo's board to study how to connect executive pay with ethical conduct.

Islamic finance body AAOIFI looks to finalise new standards by yr-end

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) plans to finalize several new standards by the end of the year. Bahrain-based AAOIFI has published a draft sharia standard for gold-based products with a one month consultation period ending on Nov. 9. AAOIFI's sharia board also discussed work on a new sharia standard covering credit cards, while a final draft of a sharia standard covering liability of investment managers would be issued during its next meeting. Standards for murabaha, sukuk and ijara are also underway with a working group expected to finalize them by the end of the year. A revision of the existing standard on sukuk will cover issues including the asset-backed and asset-based nature of sukuk, capital boosting instruments, beneficial ownership and non-viability clauses.

Google Said It Would Ban All Payday Loan Ads. It Didn’t.

In May Google announced it would ban all payday loan advertisements through its AdWords service. But months after the policy was implemented, brokers have easily sidestepped the company’s rules, leaving consumers still vulnerable to high-cost debt traps that can ruin their financial lives. These brokers are not payday lenders but what are known as 'lead generators.' They take consumers’ personal information, run a credit history, and then sell the file to payday lenders, based on what kind of loan they can afford. Although Google said they want to protect users from deceptive or harmful financial products, several advertisements are still displayed at the top of a search, from companies like GOInstallmentLoans.com, WeLend2U and QuickLoanTree.

#UK P2P Finance Association Releases Major Research on Economics of Peer to Peer Lending

The UK Peer to Peer Finance Association (P2PFA) has released a commissioned study on the economics of the peer to peer lending market in the UK. The study focused specifically on the eight-member platforms of the P2PFA which collectively comprise over 75% of the UK market. Reinder van Dijk, Partner at Oxera consulting, called peer to peer lending a 'real innovation' bringing benefits to both borrowers and investors. According to the report, P2P lending has created additional competition and choice in the market for loans and investment. P2P lending provides new options for retail investors, opening up access to risk-and-return from an asset class of consumer and business loans with net returns of between 4% & 8%. P2P lending does not create systemic risk, P2PFA member platforms provide a level of transparency which empowers investors.

Islamic banking consumers prefer not to choose between Islamic and conventional products

A recent study on Islamic microfinance by the Consultative Group to Assist the Poor (CGAP), Yale University and Tameweelcom found less price sensitivity by some consumers and a lot of focus on simplicity in product offerings and Shariah compliance. Consumers of financial products are in general price sensitive and as costs increase, demand goes down. It turned out that about 30% of Muslims always prefer a Shariah-compliant product with little price sensitivity. When given the option to choose between Islamic and conventional banking products, consumers are less likely to make a choice than if presented with only one of the products. The authors attribute this finding to the 'paradox of choice'. If a conventional bank thinks they can maintain market share by starting an Islamic window to offer Islamic products alongside conventional products, they may end up turning off consumers.

Fitch affirms GFH rating with revised outlook to positive

Fitch Ratings has affirmed GFH Financial Group’s (GFH) Short-term Issuer Default Rating (IDR) at "B" and revised its outlook upward from stable to Positive with a Long-term IDR at "B-". The positive outlook reflects the steps GFH’s management have taken to strengthen its balance sheet by paying down debt, reshaping the business model with focus on income-generating investments, and consequent improvement of profitability. GFH said it believes that this upward revision of the outlook is the result of its new strategy and in developing new recurring steams of income through income yielding investments.

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