IslamicFinance.de

Islamic derivatives are still struggling to gain traction in the Gulf, six months after the launch of a much-touted over-the-counter contract aimed at creating a standard legal framework for hedging products. Experts said the contract, known as the Tahawwut Master Agreement, in theory provides Islamic institutions with a simpler template for risk management that has been approved by sharia scholars. But the contract has been slow to catch on among Islamic institutions in the region as many are put off by the dense language of the document and still question the sharia compliance of hedging products, which are often associated with speculation. Harris Irfan, head of Islamic products at Barclays Capital, said the tahawwut agreement was an important first-step in creating much-needed derivatives products in the Islamic finance industry, but the fear of the unknown was hindering growth.