Dubai Financial Market (DFM)

DFM adds significant risks in Islamic finance on #hedging #standards

Dubai Financial Market (DFM) said it has officially published the final version of its Standard on Hedging against Investment and Finance Risks. This standard is the newest addition to DFM’s Sharia-compliant standards, which include Standard on Stocks and Standard on Sukuk issued in 2007 and 2014. The key amendments and add-ons to the draft of the standard are adding two types of risks, property risk and reputational risk. The amendment also emphasises the admissibility of the penalty clause only in Istisna, supply contracts and labour-lease contracts, excluding the contracts that result in a monetary debt owed by the debtor. It also emphasises the admissibility of the third-party guarantee in contracts of partnerships, Mudaraba and agency in investment, provided no link is made between this guarantee and the contract of partnership or Mudaraba.

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