The first set of standards was announced during a special session held today in Dubai. The session was attended by a large number of dealers, brokers, representatives of listed companies, professors in Shariah law and members of the media.
Following the 2007 Annual General Meeting of DFM, when the company announced its intention to become the world’s first Islamic bourse, DFM’s Shariah Board has focused on the establishment of criteria to classify listed companies in terms of Shariah-compliance and accounting practices.
Essa Kazim, Chairman, DFM, said: "The conversion of DFM into a Shariah-compliant bourse further sets Dubai apart on the global stage as a pioneer in the key growth area of Islamic financial services. By providing ample opportunity for conventional firms to continue to serve as full participants in DFM, this strategic move will benefit all our stakeholders."
Hussaim Hamid, Chairman of the DFM Sharia Board, said: "The Islamic financial industry is witnessing the fastest rate of expansion ever seen in its history. It is fitting that Dubai, home of the first Islamic bank in the world, would also be home to the first Islamic financial market. None of this would have been possible without the hard work and immense effort undertaken by the management of DFM. The transformation from a conventional market to a Shariah-compliant one has been a huge undertaking, but it has gone extremely well."
Hamid added: "Trading within an Islamic financial market requires criteria that distinguish between Shariah-compliant financial instruments and conventional ones. For this reason the DFM Shariah Board developed criteria that will identify all investments in this regard. Today’s meeting marks the formalisation of those criteria for classifying equities into these two categories."
The first standards include details about the trading of DFM-listed companies’ shares in accordance with Shariah law, as well as practical implications for brokers stemming from these regulatory changes.
The standards are divided into five sections and cover the following areas: definitions of terms and criteria; implications for brokers and investors; guidelines for compliance for conventional firms; conventional income guidelines; and general rules and regulations.
