UK moves to regulate sukuks

The British government will seek to remove one of the final technical obstacles to the issuance of Islamic bonds, the Treasury said.

Islamic finance professionals in the UK, which hosts five stand-alone Islamic banks, were optimistic that if the Parliament voted in favour next month to regulate sukuk as bonds rather than investment vehicles, it would encourage the growth of a market that has struggled for traction.

If passed, the measure could save issuers of Islamic bonds up to £10,000 (Dh59,894) a year, a spokesman for the British Treasury said.

Sukuk are seen as bonds because of their fixed income characteristics but their structure has equity-like qualities, which leads to uncertainty over how they should be treated from a regulatory point of view.

"I think this legislation is definitely a concrete step forward. The characterisation of sukuk as collective investment schemes has plagued the UK, so it is good to see it finally resolved," said a senior industry figure who declined to be identified.

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