| The International Islamic Financial Market (IIFM), founded by the central banks of Malaysia, Bahrain and Indonesia, plans to create Shariah-compliant repurchase agreements to help Islamic banks manage funds and boost trading. IIFM wants to introduce repos that do not violate prhobition on riba. It has proposed allowing third parties to act as intermediaries between buyers and sellers of sukuk used as collateral for short-term funds. Regulators from Malaysia to Bahrain are trying to expand products available to Islamic banks and borrowers. The repos recommended by the IIFM would use a profit rate, unlike conventional repos, where traders post securities as collateral for cash and agree to buy them back at a specified price and date, earning or paying the difference as interest. |
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