The International Islamic Financial Market (IIFM) organised a workshop on its Islamic hedging and liquidity management standards, which was hosted by Clifford Chance at their London office.
The workshop was attended by more than 60 delegates from around 40 institutions, which included regulators, banks, law firms, academics and other market practitioners from UK and abroad. The participants were given detailed technical briefings on IIFM’s standards on Islamic hedging and liquidity management by leading experts in the field.
The first session of the workshop was on Islamic Hedging Standards where Ijlal Ahmed Alvi, chief executive of IIFM, gave a brief history of the development of the Islamic hedging segment, IIFM’s pioneering role and its 10 plus years of fruitful cooperation with its joint partner ISDA which has led to the publication of a complete set of Islamic hedging standards, including a master agreement, product confirmations and credit support deed.
Habib Motani, partner at Clifford Chance gave a detailed presentation on the legal aspects of the Tahawwut master agreement including a detailed briefing on key clauses such as early termination, transactions and designated future transactions, events of default and termination events, the use of Musawama etc. He also briefed the audience on the key features of the credit support deed for cash collateral developed to address the recent variation margin regulatory requirements.
Alvi explained the working of hedging product confirmations namely those relating to Islamic Profit Rate Swaps, Islamic Cross Currency Swaps and Islamic FX Forwards, which are required to mitigate currency or rate of return mismatch risk.
Dr. Peter Werner, senior counsel at International Swaps & Derivatives Association then provided an overview of the governing law and netting provisions and the importance of the recognition of the netting of financial contracts particularly in cross-border transactions. He stressed the importance of standardised documentation and product templates for the Islamic hedging segment.