"Recent coverage by the Financial Times has highlighted growing divisions within the industry, with some market participants warning that stricter interpretation could reduce flexibility, while others argue it is necessary to reinforce credibility in Islamic capital markets. The debate comes at a moment when Islamic finance is no longer a niche segment. Sukuk issuance has expanded steadily across the Middle East and Southeast Asia and is increasingly distributed through global banking channels."
"Industry observers increasingly agree that the real challenge is not whether standards should evolve, but how they can do so without weakening market depth or cross border operability. Sukuk today are issued by sovereigns and corporates, settled through international banking infrastructure and managed across jurisdictions with very different regulatory and cultural frameworks. This is where theory meets execution."
A proposed rule change could reshape the global sukuk market by tightening asset ownership requirements, creating tension between strengthening Shariah authenticity and preserving liquidity and issuance. AAOIFI Standard 62 aims to clarify what qualifies as genuine asset backing in sukuk structures. Industry participants are divided: some warn stricter interpretation may reduce structural flexibility, while others believe it is necessary to reinforce credibility in Islamic capital markets. Sukuk issuance has grown across the Middle East and Southeast Asia and increasingly uses global banking channels. As volumes rise, scrutiny of economic substance versus legal form intensifies. Operational and cross-border execution challenges are central to maintaining market depth.
Read at Business Matters
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