The new benchmark can be used to price a number of Islamic instruments including common overnight to short-term treasury investment and financing instruments
Thomson Reuters has launched the world’s first Islamic finance benchmark rate, designed to provide an objective indicator for the average expected return on Shariah-compliant short-term interbank funding.
The Islamic Interbank Benchmark Rate (IIBR) uses the contributed rates of 16 Islamic banks and the Islamic sections of conventional banks to provide a reliable and much-needed alternative for pricing Islamic instruments to the conventional interest-based benchmarks used for mainstream finance.
Established in co-operation with the Islamic Development Bank (IDB), Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the Bahrain Association of Banks (BAB), Hawkamah Institute for Corporate Governance and a number of major Islamic banks, the IIBR harnesses Thomson Reuters global benchmark fixings infrastructure which is used to compile over 100 fixings around the world.
Rates for Shariah-compliant US dollar funding will be contributed by the 16-member panel in the morning each business day to Thomson Reuters systems and will be published daily on Thomson Reuters terminals and feeds at 11.00am Makkah time (GMT+3).
The new benchmark can be used to price a number of Islamic instruments including common overnight to short-term treasury investment and financing instruments such as Murabaha, Wakala and Mudaraba, retail financing instruments such as property and car finance, and sukuk and other Shariah-compliant fixed income instruments. It can also be used for the pricing and benchmarking of corporate finance and investment assets.