IIFM and BAFT announced the release of their joint initiative of creating global master participation agreements to support the development of Islamic trade finance business.
IIFM and BAFT Publish MPA’s for Islamic Trade Finance
WASHINGTON — IIFM (International Islamic Financial Market) and BAFT (Bankers Association for Finance & Trade), announced the release of their joint initiative of creating global master participation agreements to support the development of Islamic trade finance business.
The IIFM-BAFT Master Participation Agreements (IIFM-BAFT MPA’s) consist of two separate standardized framework documentation to cater for Shari’ah-compliant Unfunded and Funded participation arrangements for trade finance transactions. The master agreements are supplemented by a Structure Memorandum and an Operational Guidance Memorandum to provide better understanding on use of the documentation from Shari’ah, legal and operational aspects. In addition, there are separate Shari‘ah pronouncement for each MPA standard.
“Trade finance plays an important role in the global financial system, and for Islamic finance it presents a huge opportunity which the market participants must avail,” said Khalid Hamad, chairman of IIFM. “The IIFM-BAFT Master Participation Agreements, like previous IIFM standards, will provide greater transparency, cost and time efficiency, legal certainty as well as Shari’ah harmonization which in turn will contribute in creating more active Islamic trade finance business.”
“Islamic trade has become an important transaction stream in many markets,” said Tod Burwell, president and CEO of BAFT. “By standardizing the framework for Shari’ah-compliant participation arrangements relating to trade, we hope that transaction execution will become easier and trade will continue to facilitate economic growth in these markets.”
“The IIFM-BAFT MPAs are developed based on a comprehensive industry consultation process under the guidance of the IIFM Shari’ah Board,” said Ijlal Ahmed Alvi, CEO of IIFM. “The MPAs provide the market participants with a robust and ready-to-use documentation. This is yet another major accomplishment for the Islamic finance industry, and going forward IIFM will aim to tackle other pressing issues relating to trade finance including Islamic trade finance products as part of the MPA’s development.”
IIFM and BAFT acknowledge the support of The Waqf Fund (Bahrain) for providing financial assistance grant in the development of these important standard documentations which is helping in the sustainable development of Islamic finance industry.
The templates may be found here
IIFM is established under Royal Decree (23) Year 2002 of the Kingdom of Bahrain as a neutral and non-profit standard setting organization that has been mandated to develop Shari’ah-compliant financial documentation and product confirmation Standards for the Islamic Financial Services Industry. IIFM’s other services include organizing specialized industry awareness seminars, technical workshops and industry consultative meetings as well as publishing research papers and an annual Global Sukuk Report. The organization’s website is www.iifm.net
BAFT, the leading global financial services association for international transaction banking, helps bridge solutions across financial institutions, service providers and the regulatory community that promote sound financial practices enabling innovation, efficiency, and commercial growth. BAFT engages on a wide range of topics affecting transaction banking, including trade finance, payments, and compliance. The association website is www.baft.org.