Latest news with #AAOIFIStandard62
Gulf Today
a day ago
- Business
- Gulf Today
Diamond Standard announces Fatwa: The ideal solution for Islamic finance
Diamond Standard Co., producer of the world's only regulator-approved natural diamond commodities, today announced a historic milestone for the Islamic finance industry: the issuance of a Fatwa by Sheikh Dr. Mohamed Ali Elgari, approving the use of diamond commodities to enable more efficient and more proper Islamic finance applications. Dr. Elgari is an esteemed authority in Islamic finance, having served as Professor and Director of the Centre for Research in Islamic Economics at King Abdulaziz University, and as Shariah board member for organizations including AAOIFI, Islamic Fiqh Academy, Abu Dhabi Islamic Bank, BlackRock, Citibank, Dubai Islamic Bank, Emirates NDB, HSBC, Standard Chartered and other banks worldwide. A New Era for $5 Trillion of Islamic Finance The Fatwa signifies a pivotal breakthrough for Islamic finance, where the lending of money with interest is prohibited under Shariah. Instead of directly lending money, the annual settlement for $5 trillion of global loan and bond transactions must be asset-backed, through structures like commodity Murabaha. Until now, commodity Murabaha used metals like nickel, copper, or aluminum. These assets were often created on paper, as options and warrants—a practice now in conflict with AAOIFI Standard 62, which requires the title to the commodity to be delivered to the borrower. Gold, silver, and food commodities are not permitted for Murabaha, and use of metals can result in substantial storage and delivery costs. In contrast, Diamond Standard commodities are a Shariah compliant, fully deliverable and fungible physical asset, with custody and delivery costs up to 97% less than that for metals like copper. After the issuance of Standard 62, a consortium of Islamic banks asked Diamond Standard to develop a commodity Murahaba solution, with audited physical custody in a Muslim majority country. Technology Meets Tradition Diamonds are a $1.2 trillion natural resource that was inaccessible to investors. Diamond Standard commodities—physical Coins and Bars—contain optimized and equivalent sets of diamonds, transparently sealed with a wireless computer chip. Since the commodities are all equal, they trade easily on spot exchanges, with a daily market price reported by Bloomberg. The wireless chip enables each commodity to issue an electronic title of ownership, recorded and traded securely on a public blockchain. This innovation supports instant title transfer and remote audit, and eliminates all uncertainty. The commodities are approved to settle CFTC-regulated futures and options in the U.S., and the commodity production is internally audited by Deloitte. GCC Expansion and Islamic Trading Platform To provide a standing pool of commodities to support Islamic applications, and enable investors to allocate to diamonds as a newly accessible natural resource, Diamond Standard is launching a commodity holding and trading company in the Gulf Cooperation Council (GCC) region. This entity will: Supply Shariah-compliant diamond commodities to Islamic finance institutions and trading platforms for Murabaha via an active market making desk. Offer a listed fund vehicle for equity and Sukuk investors seeking to invest in hard assets, expecting the value of diamonds to increase due to Islamic and investment demand. Anchor the development of new manufacturing, exports, and trading in the GCC region. This Diamond Standard commodity holding company has secured $280 million in capital commitments and is in discussions with GCC anchor investors to finalize the location of diamond importing, production and trading in the region. The initiative is expected to create over 200 new jobs, relating to commodity operations, import and export, marketing, trading, custody, and lending–as well as Islamic finance jobs. Tax Free Custody at DMCC Diamond Standard also announced that it had selected the Dubai Multi Commodities Centre (DMCC) as the venue to provide audited, tax-free custody for the Diamond Standard commodities. This will benefit Islamic banks and investors by avoiding the tariffs on diamonds entering the U.S. and elsewhere. Unlocking a New Future Cormac Kinney, Founder and CEO of Diamond Standard, stated: 'We intended to unlock $1.2 trillion of natural diamonds as an investment asset, but their dense value, combined with modern technology, has surprisingly made diamonds ideal for Islamic finance. We are honored to offer this asset to strengthen Islamic values.' By establishing Shariah-compliant diamond commodities, Diamond Standard is pioneering a new asset class for Islamic finance—fusing centuries-old ethical values with the latest innovations in blockchain and commodities, and offering borrowers and investors an unexpected, but ideal solution for modern Islamic financial transactions. For more information, visit
Web Release
3 days ago
- Business
- Web Release
Diamond Standard Announces Fatwa: The Ideal Solution for Islamic Finance
Diamond Standard Co., producer of the world's only regulator-approved natural diamond commodities, today announced a historic milestone for the Islamic finance industry: the issuance of a Fatwa by Sheikh Dr. Mohamed Ali Elgari, approving the use of diamond commodities to enable more efficient and more proper Islamic finance applications. Dr. Elgari is an esteemed authority in Islamic finance, having served as Professor and Director of the Centre for Research in Islamic Economics at King Abdulaziz University, and as Shariah board member for organizations including AAOIFI, Islamic Fiqh Academy, Abu Dhabi Islamic Bank, BlackRock, Citibank, Dubai Islamic Bank, Emirates NDB, HSBC, Standard Chartered and other banks worldwide. A New Era for $5 Trillion of Islamic Finance The Fatwa signifies a pivotal breakthrough for Islamic finance, where the lending of money with interest is prohibited under Shariah. Instead of directly lending money, the annual settlement for $5 trillion of global loan and bond transactions must be asset-backed, through structures like commodity Murabaha. Until now, commodity Murabaha used metals like nickel, copper, or aluminum. These assets were often created on paper, as options and warrants—a practice now in conflict with AAOIFI Standard 62, which requires the title to the commodity to be delivered to the borrower. Gold, silver, and food commodities are not permitted for Murabaha, and use of metals can result in substantial storage and delivery costs. In contrast, Diamond Standard commodities are a Shariah compliant, fully deliverable and fungible physical asset, with custody and delivery costs up to 97% less than that for metals like copper. After the issuance of Standard 62, a consortium of Islamic banks asked Diamond Standard to develop a commodity Murahaba solution, with audited physical custody in a Muslim majority country. Technology Meets Tradition Diamonds are a $1.2 trillion natural resource that was inaccessible to investors. Diamond Standard commodities—physical Coins and Bars—contain optimized and equivalent sets of diamonds, transparently sealed with a wireless computer chip. Since the commodities are all equal, they trade easily on spot exchanges, with a daily market price reported by Bloomberg. The wireless chip enables each commodity to issue an electronic title of ownership, recorded and traded securely on a public blockchain. This innovation supports instant title transfer and remote audit, and eliminates all uncertainty. The commodities are approved to settle CFTC-regulated futures and options in the U.S., and the commodity production is internally audited by Deloitte. GCC Expansion and Islamic Trading Platform To provide a standing pool of commodities to support Islamic applications, and enable investors to allocate to diamonds as a newly accessible natural resource, Diamond Standard is launching a commodity holding and trading company in the Gulf Cooperation Council (GCC) region. This entity will: Supply Shariah-compliant diamond commodities to Islamic finance institutions and trading platforms for Murabaha via an active market making desk. Offer a listed fund vehicle for equity and Sukuk investors seeking to invest in hard assets, expecting the value of diamonds to increase due to Islamic and investment demand. Anchor the development of new manufacturing, exports, and trading in the GCC region. This Diamond Standard commodity holding company has secured $280 million in capital commitments and is in discussions with GCC anchor investors to finalize the location of diamond importing, production and trading in the region. The initiative is expected to create over 200 new jobs, relating to commodity operations, import and export, marketing, trading, custody, and lending–as well as Islamic finance jobs. Tax Free Custody at DMCC Diamond Standard also announced that it had selected the Dubai Multi Commodities Centre (DMCC) as the venue to provide audited, tax-free custody for the Diamond Standard commodities. This will benefit Islamic banks and investors by avoiding the tariffs on diamonds entering the U.S. and elsewhere. Unlocking a New Future Cormac Kinney, Founder and CEO of Diamond Standard, stated: 'We intended to unlock $1.2 trillion of natural diamonds as an investment asset, but their dense value, combined with modern technology, has surprisingly made diamonds ideal for Islamic finance. We are honored to offer this asset to strengthen Islamic values.' By establishing Shariah-compliant diamond commodities, Diamond Standard is pioneering a new asset class for Islamic finance—fusing centuries-old ethical values with the latest innovations in blockchain and commodities, and offering borrowers and investors an unexpected, but ideal solution for modern Islamic financial transactions. For more information, visit
Mid East Info
4 days ago
- Business
- Mid East Info
Diamond Standard Announces Fatwa: The Ideal Solution for Islamic Finance
Diamond Standard Co., producer of the world's only regulator-approved natural diamond commodities, today announced a historic milestone for the Islamic finance industry: the issuance of a Fatwa by Sheikh Dr. Mohamed Ali Elgari, approving the use of diamond commodities to enable more efficient and more proper Islamic finance applications. Dr. Elgari is an esteemed authority in Islamic finance, having served as Professor and Director of the Centre for Research in Islamic Economics at King Abdulaziz University, and as Shariah board member for organizations including AAOIFI, Islamic Fiqh Academy, Abu Dhabi Islamic Bank, BlackRock, Citibank, Dubai Islamic Bank, Emirates NDB, HSBC, Standard Chartered and other banks worldwide. A New Era for $5 Trillion of Islamic Finance: The Fatwa signifies a pivotal breakthrough for Islamic finance, where the lending of money with interest is prohibited under Shariah. Instead of directly lending money, the annual settlement for $5 trillion of global loan and bond transactions must be asset-backed, through structures like commodity Murabaha. Until now, commodity Murabaha used metals like nickel, copper, or aluminum. These assets were often created on paper, as options and warrants—a practice now in conflict with AAOIFI Standard 62, which requires the title to the commodity to be delivered to the borrower. Gold, silver, and food commodities are not permitted for Murabaha, and use of metals can result in substantial storage and delivery costs. In contrast, Diamond Standard commodities are a Shariah compliant, fully deliverable and fungible physical asset, with custody and delivery costs up to 97% less than that for metals like copper. After the issuance of Standard 62, a consortium of Islamic banks asked Diamond Standard to develop a commodity Murahaba solution, with audited physical custody in a Muslim majority country. Technology Meets Tradition: Diamonds are a $1.2 trillion natural resource that was inaccessible to investors. Diamond Standard commodities—physical Coins and Bars—contain optimized and equivalent sets of diamonds, transparently sealed with a wireless computer chip. Since the commodities are all equal, they trade easily on spot exchanges, with a daily market price reported by Bloomberg. The wireless chip enables each commodity to issue an electronic title of ownership, recorded and traded securely on a public blockchain. This innovation supports instant title transfer and remote audit, and eliminates all uncertainty. The commodities are approved to settle CFTC-regulated futures and options in the U.S., and the commodity production is internally audited by Deloitte. GCC Expansion and Islamic Trading Platform: To provide a standing pool of commodities to support Islamic applications, and enable investors to allocate to diamonds as a newly accessible natural resource, Diamond Standard is launching a commodity holding and trading company in the Gulf Cooperation Council (GCC) region. This entity will: Supply Shariah-compliant diamond commodities to Islamic finance institutions and trading platforms for Murabaha via an active market making desk. Offer a listed fund vehicle for equity and Sukuk investors seeking to invest in hard assets, expecting the value of diamonds to increase due to Islamic and investment demand. Anchor the development of new manufacturing, exports, and trading in the GCC region. This Diamond Standard commodity holding company has secured $280 million in capital commitments and is in discussions with GCC anchor investors to finalize the location of diamond importing, production and trading in the region. The initiative is expected to create over 200 new jobs, relating to commodity operations, import and export, marketing, trading, custody, and lending–as well as Islamic finance jobs. Tax Free Custody at DMCC: Diamond Standard also announced that it had selected the Dubai Multi Commodities Centre (DMCC) as the venue to provide audited, tax-free custody for the Diamond Standard commodities. This will benefit Islamic banks and investors by avoiding the tariffs on diamonds entering the U.S. and elsewhere. Unlocking a New Future: Cormac Kinney, Founder and CEO of Diamond Standard, stated: 'We intended to unlock $1.2 trillion of natural diamonds as an investment asset, but their dense value, combined with modern technology, has surprisingly made diamonds ideal for Islamic finance. We are honored to offer this asset to strengthen Islamic values.' By establishing Shariah-compliant diamond commodities, Diamond Standard is pioneering a new asset class for Islamic finance—fusing centuries-old ethical values with the latest innovations in blockchain and commodities, and offering borrowers and investors an unexpected, but ideal solution for modern Islamic financial transactions.
Bloomberg
10-03-2025
- Business
- Bloomberg
Fitch Cautions on Rule That Could Make Sukuk Similar to Equity
A proposed change to the regime governing global sukuk risks transforming the asset class into an equity-like instrument that can't be assessed by credit-rating companies, according to Bashar Al Natoor, head of Islamic finance at Fitch Ratings. The so-called AAOIFI Standard 62, aimed at strengthening compliance with Shariah, or Islamic religious laws, would require sukuk issuers to transfer ownership of the underlying assets to the investors. But sukuk-issuing nations can potentially adopt less disruptive ways to implement the rule that would leave the securities ratable, Al Natoor said in an interview.
Zawya
20-02-2025
- Business
- Zawya
Sukuk and bond pricing remains correlated as spreads narrow despite volatility
Fitch Ratings - Jakarta/Dubai: The pricing of comparable sukuk and bonds analysed by Fitch Ratings remained highly correlated in 2024 for the fifth-year running with spreads between the two instrument types further narrowing despite regional geopolitical tensions, economic volatility and sharia-compliance uncertainties, says Fitch Ratings. It is unclear whether these dynamics will impact this trend over 2025 and 2026. The pricing correlation was about 0.95 (on a scale of 0 to 1) for 56 comparable sukuk and bonds analysed by Fitch between 2019 and 2024, based on yield-to-maturity (YTM). The full-year 2024 correlation dropped to 0.91, which is still high given the relatively small size of the analysed pool. At the same time, average spreads between comparable sukuk and bonds narrowed to 10bp in 2024 from 25bp in 2023 and 27bp in 2022. Between 2019-2024, sukuk had lower yields on average than comparable bonds in about 50% of the analysed cases, while 39.3% of sukuk had similar yields to comparable bonds, and 10.7% had higher yields. This analysis can offer insights into investor perceptions of credit risk between sukuk and bonds. The instruments were mostly issued by entities from the Gulf Cooperation Council, Indonesia, and Turkiye, covering sovereigns, financial institutions, corporates, and international public finance. Still, there have been instances where pricing correlation fell, at least for a brief period before reverting, due to macroeconomic or sharia-specific events. Also, it should be noted that there are few directly comparable sukuk and bonds with close similarity in payment priority, issuance dates, maturity, and currency denomination from the same issuer. These findings are also observed with the S&P MENA sukuk and bonds indices, which had a correlation of 0.99 over the five years ending December 2024 based on YTM with a 27bp spread between sukuk and bond yields. The spread also further narrowed in 2024, averaging 15bp. Among the uncertainties facing the market is AAOIFI Sharia Standard No. 62 which, while still in draft format, could be finalised and issued in 2025. Among key proposals is the transfer of legal ownership and associated risks of the underlying sukuk assets to the sukuk holders, granting investors asset recourse to ensure closer adherence to shariah principles. Any impact of AAOIFI Standard 62 implementation on sukuk pricing compared to bonds depends on the final version, which jurisdictions and entities adopt it, and, most importantly, how it is reflected in sukuk documentation. New sharia-related requirements in sukuk documents, which are not usually seen in conventional bonds, did not appear to have an impact on pricing in 2024. These includes terms in the sukuk documentation related to asset-inspection, asset takeover, sharia-compliant hedging, and partial payment of the periodical distribution amount in certain circumstances and for limited period. Fitch expects global sukuk to surpass USD1 trillion outstanding in 2025, remaining a key part of the debt capital market in a number of Organisation of Islamic Cooperation countries. Investor demand for many sukuk remains intact, mainly from GCC Islamic banks that have adequate liquidity. Global outstanding sukuk rose 10% to USD930 billion at end-2024 year on year despite regional geopolitical tensions. The use of sukuk is also expected to remain a significant tool in emerging markets having totalled 12% of all emerging market US dollar debt issued in 2024 (excluding China). About 81.4% of Fitch-rated sukuk are investment-grade as of end-2024. Sukuk default rates globally are very low, at only 0.19% of all sukuk issued as of end-2024. -Ends- Media Contact: Matt Pearson Senior Associate, Corporate Communications Fitch Group, 30 North Colonnade, London, E14 5GN E:
