Thomson Reuters announced the addition of leading Islamic scholars and bankers to the supervisory bodies of the Islamic Interbank Benchmark Rate, expanding geographic and community representation on both the IIBR Shariah Committee and Islamic Benchmark Committee.
According to Thomson Reuters, the new members, announced at the 8th Annual World Islamic Funds and Financial Markets Conference in Bahrain, add credence to IIBR as a viable alternative for pricing Islamic instruments and establishing Islamic finance authenticity.
Launched in November 2011 as the world’s first Islamic finance benchmark rate, IIBR is designed to provide an objective and dedicated indicator for the average expected return on Shariah-compliant short-term interbank funding and an alternative to the conventional interest-based benchmarks used for mainstream finance. Both the Shariah Committee and the Islamic Benchmark Committee jointly oversee the ongoing implementation and integrity of IIBR.
Retired Justice Muhammad Taqi Usmani, the globally-prominent Shariah scholar and chairman of the AAOIFI Shariah Supervisory Board, and Sheikh Dr. Akram Laldin, executive director of the International Shariah Research Academy now both join the IIBR Shariah Committee, with Justice Taqi Usmani taking the role of Chairman to continue the work of Sheikh Yusuf Talal Delorenzo who remains a committee member.
“I strongly believe that IIBR is a step forward towards liberalising Islamic Finance from the dependence on conventional benchmarks which has been a point of criticism in Islamic finance,” said Sheikh Dr. Akram Laldin.
In addition, both Dr. Abbas Mirakhor, first chair of Islamic Finance at INCEIF, and Ismail E Dadabhoy, an independent Islamic Banker and ex-executive director and head of Islamic Finance at UBS, join the IIBR Islamic Benchmark Committee.
“The efforts of Thomson Reuters to initiate an analytic and pragmatic approach to designing a non-interest rate-based benchmark are commendable,” said Dr. Abbas Mirakhor. “Hopefully, this initiative will culminate in creating a true sector-driven benchmark for a system of finance that is based on sharing rather than transferring or shifting risk. IIBR is a promising and practical move in that direction.”
“I share Thomson Reuters commitment to aiding the development of the emerging international Islamic Finance industry and see that IIBR is part of new generation of tools and standards that will allow for new products, bring all-important transparency and therefore ease international business,” said Ismail E Dadabhoy.
Established in co-operation with the Islamic Development Bank, Accounting and Auditing Organisation for Islamic Financial Institutions, the Bahrain Association of Banks, Hawkamah Institute for Corporate Governance and a number of major Islamic banks, the IIBR uses the contributed rates of 16 Islamic banks to calculate the IIBR rate daily, harnessing Thomson Reuters global benchmark fixings infrastructure which is used to compile over 100 fixings around the world.
“The launch of the IIBR has captured the imagination of the key stakeholders in Islamic finance and the addition of Sh Taqi, Dr Abbas, Sh Laldin and Br Ismail demonstrates their belief in Thomson Reuters commitment and vision to grow, develop and bring authentic innovation to Islamic finance, helping the industry grow to $2 trillion in the next few years,” said Rushdi Siddiqui, global head of Islamic finance, Thomson Reuters. “IIBR remains a great example of collaboration; of an industry coming together to work towards a common objective – Islamic finance authenticity.”