DUBAI, U.A.E., 7th March 2018 — BAFT (Bankers Association for Finance & Trade), an international financial services association, and IIFM (International Islamic Financial Market), an Islamic financial services standard-setting body, announced a memorandum of understanding to jointly create a master risk participation agreement to support Islamic Trade Finance.
BAFT introduced its master risk participation agreement to support secondary sales of trade finance assets over 10 years ago, and it has become the industry benchmark for such trade finance transactions. The joint IIFM-BAFT Islamic Risk Participation Agreement (IMRPA) will incorporate the practical considerations for funded and unfunded risk participations in trade assets within a Shari’ah-compliant framework.
“IIFM is at the forefront of developing standardized Islamic financial contracts and product confirmations which lead to unified and transparent market practices and contributes to the sustainable growth of the industry,” said Khalid Hamad, Chairman of IIFM. “Earlier cooperation with certain other international organizations and now BAFT will no doubt contribute in increasing the trade finance business on a Shari’ah-compliant basis.”
“BAFT is proud to partner with IIFM to introduce some much-needed standardization to the market in support of Islamic trade,” said Tod Burwell, President and CEO of BAFT. “Their expertise in Islamic finance, coupled with our practical experience in trade risk participations, can hopefully find commonality and develop document standard that will prove beneficial.”
“Trade finance is the backbone of the global financial system with import and exports in trillions of U.S. dollars but the share of Shari’ah-compliant transactions is relatively small,” said Ijlal Alvi, CEO of IIFM. “Trade finance presents huge potential for Islamic finance and our joint efforts with BAFT will benefit all stakeholders.”