A research project that will study the standardisation of Islamic finance is to be launched this year by the Dubai International Financial Centre (DIFC), says a top official.
The centre, together with undisclosed partners, will formulate standards for different types of Islamic transactions including accounting and banking, Nasser Al Shaali, CEO of the DIFC Authority, told Emirates Business. "This cannot be applied to the UAE or GCC only," he said. "It has to have a global appeal, it has to have a broad base.
"In the accounting world you have some standards that outshine others. Likewise you need standards in Islamic finance. Right now you don't have them, it's kind of an open area."
Less than a decade ago Islamic finance was just coming into existence and focused entirely on commercial banking – but today
the sector has grown dramatically. A few Western banks such as HSBC, BNP Paribas, Standard Chartered and Citigroup have been running Islamic operations for some years but they now face competition from a host of new names.
These include giants such as Morgan Stanley, Barclays Capital and Deutsche Bank as well as smaller players like medium-sized German bank WestLB, which last year alone arranged around a dozen Islamic deals worth around $4bn (Dh14.7bn).
In one striking deal WestLB underwrote a $456 million package of Islamic finance to support a leveraged buyout of Aston Martin, the racing car group, by a group of Middle East investors.
Standard & Poor's estimates that the sukuk market will top the $160bn mark by the end of the decade.