Building sharia products from the bottom up

Despite being shaken by the credit crisis and restructuring problems in Dubai, Islamic finance has continued to expand and was the fastest-growing segment of the global financial system in 2010, according to some estimates. The latest Islamic structured products are looking beyond the wrapper and applying sharia principles to all elements in the structure. By Rebecca Hampson.

The Islamic finance industry is worth $1 trillion according to the Asian Development Bank. The industry has been expanding globally, with a sharia-compliant sector developing under the central banking system in Kuwait, increasing demand in Saudi Arabia, and Islamic institutions operating out of western countries.

Providers are now looking at the need for better pricing and sharia-compliant underlying assets where a bottom-up approach is taken in the structuring of products. Previously, products