The Capital Market Authority (CMA) of Saudi Arabia has granted a Financial Technology (FinTech) Experimental Permit (ExPermit) to financial services provider Wethaq Capital Markets Platform (Wethaq) based in Dubai, United Arab Emirates (UAE). Capital Market Law and FinTech ExPermit instructions issued by the CMA provide a framework to regulate the innovation of FinTech in Saudi Arabia’s capital market.  The FinTech ExPermit allows Wethaq to use Distributed Ledger Technology (DLT) to provide securities and custod...

Manzil, a Financial Technology (FinTech) startup based in Toronto, Canada, offering Shariah-compliant financial solutions including mortgages, has opened up opportunities for public investment via a private placement on FrontFundr, a Canada-based crowdfunding platform.   Mohamad Sawwaf, Chief Executive Officer (CEO) and Co-founder at Manzil, stated that although Canadian Muslims have a high purchasing power, there is still a low participation in home ownership and capital markets amongst this demographic.&nb...

The Central Bank of the United Arab Emirates (CBUAE) has stated that banks and financial institutions have drawn down 88% (AED 44 billion) of the Targeted Economic Support Scheme (TESS) to date.  TESS is an AED 50 billion interest-free financing facility introduced by the CBUAE in March 2020 along with its AED 100 billion stimulus package, to help businesses and individuals affected by the COVID-19 pandemic. According to the CBUAE, a total of 26 banks have availed the TESS liquidity facility, with 17 banks drawing down 100%, whilst more than 140...

In a measure to help small and medium enterprises (SMEs) in Indonesia, the Government of Indonesia is planning to procure products and services worth USD 49.7 billion (over IDR 700 trillion) from SMEs for official state procurement, according to Indonesia’s Cooperatives and SMEs Minister, Teten Masduki.  Masduki stated that a trial of the above program will begin next week and added that he will compel the Government to prioritize procuring from SMEs for 2020 and beyond as the COVID-19 pandemic has caused a 57% decline in SMEs sales since the pandemic...

In efforts to maintain economic stability during the on-going COVID-19 pandemic, Bank Indonesia (BI) announced a 25 basis point (bps) reduction in the benchmark 7-day reverse repurchase rate to 4.25%, marking the third rate cut this year.  In addition, BI also lowered the deposit and lending facility rates by 25 bps each, bringing those rates to 3.5% and 5.0% respectively.  Since the start of 2020, BI has cut policy rates by a total of 75 bps in order to stimulate economic activity. This follows a 100 bps policy reduction in 2019. ...

According to the Asian Development Bank (ADB)’s Asian Development Outlook 2020 (ADO 2020), economic growth in Malaysia is predicted to decline 4% year-over-year (YoY) in 2020. This is in line with ADB’s expectation of a 2.7% YoY contraction in economic growth across the South-east Asian region, amidst broad declines in consumption, trade and investment.  According to the ADO 2020, Malaysia, having one of the more open economies in South-east Asia, has been hit by falling global trade and demand. Added to this, tight...

Fitch Ratings (Fitch) has highlighted the importance of using Shariah-compliant derivatives as tools for hedging (Tahawwut) amidst the on-going uncertainty in key Islamic finance markets, led by COVID-19, oil price declines and central bank repo rate cuts. According to Fitch, derivatives play a crucial role in hedging and mitigating risks arising from volatility in profits, exchange rates, as well as commodity prices.  Despite its increasing necessity, however, Fitch notes that derivatives markets remain extremely under-developed in these Islamic markets. More than 30% of...

Moody’s Investor Services (Moody’s) has assigned a Baa2 rating (Stable Outlook) to the USD 25 billion sovereign Sukuk issued on the 18th of June 2020 by the Government of Indonesia, through  Perusahaan Penerbit SBSN Indonesia III (PPSI III), under its existing trust certificate issuance program. Moody’ stated that the ratings are applicable to all the tranche issuances, including those set to mature in 2025, 2030, and 2050.  Moody’s notes that the ratings are in line with the Government’s long-term issu...

Al Baraka Islamic Bank – Bahrain (ABIB), a part of the Al Baraka Banking Group based in Manama, Bahrain, has signed an agreement with the Bahrain Bourse (BHB), which allows ABIB to buy and sell Shariah-compliant Ijara Sukuk through the BHB. According to media reports, this agreement will help facilitate ABIB’s financing operations for its underlying clients and aims to diversity commodities available for commodity-based Murabahah transactions to include government-based Sukuk issued by the Central Bank of Bahrain. In addition, the financing...

Cagamas MBS (Cagamas) has had two Sukuk Musharakah Islamic residential mortgage-backed securities (CMBS 2005-1 and CMBS 2007-1-i) and two residential mortgage-backed securities (CMBS 2005-2 and CMBS 2007-2) all reaffirmed as AAA with a Stable Outlook by RAM Ratings (RAM). Cagamas is a limited-purpose entity involved in securitising government staff housing loans and government staff Islamic home financing facilities. The repayment of these is based on direct deductions of the salaries and pensions of civil servants, which limits exposure to credit risks according...