Long road for standardised Islamic derivatives documentation

Islamic derivatives users are still getting to grips with a new sharia-compliant master agreement, but some argue the market will be stunted without an accompanying collateral document. Lawyers say that is some way off, so they’re cooking up bespoke contracts to fill the gap.

Since March last year, Islamic derivatives users have for the first time been able to use a contract designed for use with all the market’s most popular products and in all the world’s 56 or so different Islamic jurisdictions. It was an impressive feat of legal and religious engineering, says Bernard Barbour, director of legal and sharia affairs at QInvest, a Doha, Qatar-based investment bank, who compares it to a sleek sports car.

There’s just one problem: “It has no fuel,” he complains