IFSB Working Paper on Regulatory and Supervisory Issues in Shariah-Compliant Hedging Instruments

Kuala Lumpur, 24 December 2019 – The Islamic Financial Services Board (IFSB) today issued its 14th research in the Working Paper series, WP-14: Regulatory and Supervisory Issues in Shariah-compliant Hedging Instruments.  This working paper investigates the existing practices in relation to the use of Islamic hedging instruments and the regulatory and Shariah compliance concerns raised across IFSB jurisdictions.

The Secretary-General of the IFSB, Dr. Bello Lawal Danbatta stated, “This Paper is the fifth issuance in the IFSB’s Working Paper series this year”. He further added, “Shariah-Compliant hedging instruments, tools and strategies not only align with the operationalisation of a number of Islamic contracts for the purpose of minimising risks, but also are in sync with one of the essentials of the Shariah, which is to protect wealth. As such, this working paper provides some exploratory findings on the regulatory and supervisory issues arising from hedging instruments being used in a variety of ways in several jurisdictions, essentially as a Shariah-compliant alternative to conventional derivative instruments.”