Islamic Liquidity | Focus on money markets and repo activity

We believe that the Islamic money markets are in relatively poor shape as there are no globally accepted Shari’a compliant Islamic money market products in hard or local currencies. The Islamic repo market has not yet developed either. This lack of short dated liquid paper in the Islamic market has been a major bottleneck for the overall development of the Islamic finance industry.

The Current State of the Islamic Money Markets

• The commodity murabaha dominates the Islamic money markets. However, as a structure it is contested from a Shari’a point of view, is illiquid, inefficient and costly. Dar Al Istithmar can, via our Islamic Issuance Platform, offer a better, efficient and liquid alternative.
• Presently there is no bona fide Islamic commercial paper market and so corporates depend upon banks to finance themselves. Through our Platform, DI can assist conventional and Islamic institutions to access the liquidity of Islamic investors in an easy way.
• This lack of liquidity and added competitive disadvantage work to impede the development of local Islamic banks and can even exacerbate a liquidity crisis. Hence, Dar Al Istithmar is focusing on solutions and products to improve Islamic liquidity in general and as a first step towards accomplishing this we are setting up an Islamic Issuance Platform and at the same time we are also working on solutions for a widely accepted Islamic Repurchase Agreement.