Building an Islamic derivatives market has been
a slow process, and remains controversial with
some scholars. But the momentum is there – and a
new standardised agreement should be available
soon. As Siân Williams discovers, many firms and individuals are committed to the market and believe
a new phase of faster growth is not far off.
Huge strides have been made over the past 20 years in
Islamic finance, so that something which was once small scale
and barely known outside specialist circles is now a globally
recognised sector of the financial markets. Derivatives have
lagged behind Islamic banking and bond issuance – and
they remain controversial. Some Islamic financial players
believe derivatives will never be compatible with
Shari’ah law. But the swelling interest in Islamic
hedging structures and the wide variety of initiatives being
worked on suggest the opposite – that an Islamic
derivatives market is emerging that will eventually offer an
extensive range of services. The world of Islamic derivatives
is arcane and fragmented – nobody contacted by FOW was
able to give an indication of the size of the market. But most
participants agree that there is noticeable growth every year,
which, although disrupted by the financial crisis, looks set to
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