The IFSB Issues Three Exposure Drafts for a Two-month Public Consultation Covering Standards in Islamic Banking, Islamic Capital Markets and Islamic Insurance (Takāful) Sectors
Date posted: 28 March 2018
28 March 2018, Kuala Lumpur - The Islamic Financial Services Board (IFSB) is issuing three Exposure Drafts (ED) for a two-month Public Consultation period starting 28 March 2018 to 28 May 2018 following the approval of the IFSB Technical Committee in its 44th Meeting held in Bandar Seri Begawan, Brunei Darussalam on 22 March 2018. The IFSB invites comments from regulatory and supervisory authorities, international organisations, institutions offering Islamic financial services (IIFS), academics, and interested members of the public. The three EDs cover topics in different Islamic finance sectors. They are:
||ED-20: Key Elements in the Supervisory Review Process of Takāful / Retakāful Undertakings [Islamic Insurance Segment]
||ED-21: Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment
||ED-22: Revised Standard on Disclosures to Promote Transparency and Market Discipline for Institutions Offering Islamic Financial Services (IIFS) [Banking Segment]
The IFSB will be organising a Public Hearing for EDs 20, 21 and 22 on 10 April 2018 in Jakarta, Indonesia, which aims to provide industry stakeholders greater understanding of the three draft documents, as well as to solicit feedback on their contents, prior to their final submission to the IFSB Council in December 2018. A Webinar on the three EDs will also be held in May 2018, details of which will be announced in due course. Participation in the Public Hearing and Webinar is free and open to all.
About the Exposure Drafts
ED-20: Key Elements in the Supervisory Review Process of Takāful / Retakāful Undertakings [Islamic Insurance Segment]
The document provides guidance on the implementation of common approaches to the supervision of the takāful / retakāful industry, while addressing the specificities of the takāful / retakāful undertakings. It aims to protect the interests of the contracting parties in these undertakings, and strengthen their stability. The objectives of ED-20 include:
- To provide guidance to supervisors on minimum standards for an effective and efficient supervisory review process for takāful/retakāful undertakings, addressing the unique elements of these institutions;
- To promote, by means of supervisory review, fair, safe and stable takāful and retakāful markets for the benefit and protection of participants ; and
- To promote harmonisation of supervision internationally, and hence to enhance cooperation among supervisors.
ED-21: Core Principles for Islamic Finance Regulation [Islamic Capital Market Segment] (CPIFR-ICM)
The main objective of ED-21 is to provide a set of core principles for the regulation and supervision of the Islamic capital market (ICM), taking into consideration the specificities of Islamic finance, while complementing the existing international standards, principally International Organization of Securities Commissions (IOSCO) ‘Objectives and Principles of Securities Regulation’ and its ‘Methodology’ (May 2017). In particular, the objectives of the CPIFR- Islamic Capital Markets are:
- To provide a minimum international standard for sound supervisory practices for the regulation and assessment of the ICM;
- To protect consumers and other stakeholders by ensuring that the claim to Sharīʻah compliance made explicitly or implicitly to any ICM product or service is sound and supported by appropriate disclosures;
- To enhance the soundness and stability of the ICM – as an integral part of the Islamic financial services industry (IFSI) and the global financial system – by helping RSAs to assess the quality of their relevant supervisory systems and identify areas for improvement as an input to their reform agenda.
ED-22: Revised Standard on Disclosures to Promote Transparency and Market Discipline for Institutions Offering Islamic Financial Services (IIFS) [Banking Segment]
ED-22 is a revision of IFSB-4: Disclosures to Promote Transparency and Market Discipline for Institutions offering Islamic Financial Services (IIFS) in the banking sector, issued in 2007. It brings IFSB-4 in line with the updated framework for Pillar 3 on disclosure requirements issued by the Basel Committee on Banking Supervision (BCBS) in January 2015 and March 2017. The objectives of ED-22 are:
- to facilitate access to relevant, reliable and timely information by market participants generally, and by investment account holders (IAH) in particular, thereby enhancing their capacity to monitor and assess the performance of IIFS;
- to improve comparability and consistency of all disclosures made by IIFS;
- to support financial consumer protection by helping IIFS offer useful information disclosures on Islamic banking products; and
- to enable market participants to complement and support, through their actions in the market, the implementation of the IFSB standards.
ED-20, ED-21 and ED-22 in both English and Arabic languages are available on the IFSB website www.ifsb.org. The IFSB members and industry stakeholders may send their comments on the EDs to the IFSB Secretariat at: firstname.lastname@example.org by 28 May 2018.
Information on the Public Hearing and Webinar can be seen on the IFSB website. To register, please contact Mrs. Nazarina Abdul Majid (email: email@example.com, tel: + 603 9195 1419).
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