SWIFT Issues Islamic Finance Rulebook
SWIFT has worked with The Association of Islamic Banking Institutions Malaysia (AIBIM) to launch a new rulebook for the purpose of promoting message standards in the Islamic banking and finance market.
The financial messaging services provider said that Islamic finance rulebook had been developed in response to the growing significance of the Islamic banking and finance market. It aims to provide greater clarity around the usage of Shariah-compliant mobile-terminated (MT) messages in order to expedite market harmonisation and increase straight-through processing (STP) to improve efficiency and reduce risks and cost.
“With the growing internationalisation of Islamic finance, the rulebook marks a significant milestone in our collaborative efforts,” said Kiyono Hasaka, standards specialist, Asia Pacific. “Automation of Islamic finance confirmation flows is now possible through the adoption of international MT messaging standards. The future ambition is to automate flows end-to-end covering all major Islamic finance practices”.
SWIFT added that since 2013 its Asia Pacific standards team has been working in close cooperation with AIBIM to develop STP-enabled financial messaging specific to the requirements of Islamic financial institutions.
The SWIFT Islamic finance rulebook will continue to evolve as the Islamic financial industry continues to meet the evolving business needs in the global financial arena.
This current version of the rulebook covers three types of SWIFT confirmation messages:
Future editions will include all practices that use Islamic financial instruments, such as previously developed SWIFT Murabahah solution (cost-plus-sales contract), Mudarabah (profit sharing) and Sukuk (Islamic bonds).
“The collaboration between SWIFT and AIBIM has resulted in a concise guideline that would facilitate our members to further enhance their efficiency,” said Yusry Yusoff, chief executive (CEO) and executive director of AIBIM. “We look forward for other Islamic financial institutions in other jurisdictions to utilise this solution as well,”
The SWIFT Islamic Finance rulebook was endorsed by the Shariah advisory committee of AIBIM and adopted by AIBIM council. It will be available to the message user group (MUG) from next month. The MUG is a group of users that have registered to use specific messages within a controlled user community. The MUG for the Islamic finance rulebook will also be available for registration at www.swift.com.