IFSB Organises Public Hearings on Exposure Drafts of Core Principles for Islamic Finance Regulation and Guidance Note on Liquidity Risk Management

Kuala Lumpur, 24 November 2014 – The Islamic Financial Services Board (IFSB) is inviting the IFSB members, Islamic financial community and other interested parties to attend its Public Hearings for the two new Exposure Drafts on Core Principles for Islamic Finance Regulation- Banking Segment (ED-17) and Guidance Note on Quantitative Measures for Liquidity Risk Management in Institutions Offering Islamic Financial Services (GN-6).

These Public Hearings are held within the Public Consultation period of the documents, and are part of the IFSB due process for the development of standards and guiding principles as outlined in the IFSB Guidelines and Procedures for the Preparation of Standards/Guidelines.

The Public Hearings will be held on 30 November 2014 in Manama, Kingdom of Bahrain and on 16 December 2014 in Kuala Lumpur, Malaysia.

The details of the Public Hearings are as follows:

1) Public Hearing 1

Date	:	30 November 2014 (Sunday)
Time	:	09:00 to 11:30
Venue	:	Awal 3, The Gulf Hotel Bahrain, Manama, Kingdom of Bahrain
Hosted by	:	Central Bank of Bahrain
More information	:	click here

 

1) Public Hearing 2

Date	:	16 December 2014
Time	:	15:00 to 17:30
Venue	:	Forum, Level 1, Sasana Kijang, Kuala Lumpur, Malaysia
More information	:	click here

The Exposure Drafts, which are available for download from the IFSB website, were issued on 31 October 2014, and public consultation will end on 5 January 2015.

Details on the two Exposure Drafts are as follows:

ED-17: Standard on Core Principles for Islamic Finance Regulation (Banking Segment)

Core Principles for various financial sectors have become a standard tool to guide regulators and supervisors in developing their regulatory regimes and practices. They also serve as a basis for assessing the strength and effectiveness of regulation and supervision by either the regulatory and supervisory authorities themselves or by the external parties such as the International Monetary Fund and World Bank under their FSAP programme.

The main objective of the Core Principles for Islamic Finance Regulation (CPIFR) is to provide a set of Core Principles – along with associated assessment methodology – for the regulation and supervision of the Islamic financial services industry (IFSI), taking into consideration the specificities of the IIFS in the banking segment, the lessons learned from the financial crisis, and complementing the existing international standards, principally the Core Principles for Effective Banking Supervision issued by Basel Committee on Banking Supervision.

It is envisaged that these Core Principles will be used by jurisdictions as a benchmark for assessing the quality of their regulatory and supervisory systems and for identifying future work to achieve a baseline level of sound regulations and practices for Islamic finance. The CPIFR will promote further integration of Islamic finance with the international architecture for financial stability, while simultaneously providing incentives for improving the prudential framework across jurisdictions so that it is harmonised and consistently implemented across the globe.

CPIFR will also facilitate the work of those supervisory authorities that are new to the regulation and supervision of IIFS and face challenges in identifying applicable principles and benchmarks for assessing the gaps in their existing policies and regulations, while addressing the specificities of Islamic finance. The differences in the operational and Sharī`ah characteristics of Islamic finance products in various jurisdictions highlight the need for standardisation of the prudential supervision framework at the international level, which will be facilitated by the issuance of CPIFR.

After the final issuance of IFSB-17 in 2015, the IFSB envisages to prepare the Core Principles for other segments of the IFSI, including Takāful and Islamic capital markets.

ED of GN-6: Guidance Note on Quantitative Measures for Liquidity Risk Management in IIFS

The ED of GN-6 aims to complement global liquidity standards (such as LCR and NSFR) and other developments on liquidity risk management for the Islamic financial services industry (IFSI). It will help the regulatory and supervisory authorities to provide a level-playing field to the IIFS in the application of liquidity standards vis-a-vis their conventional counterparts, and thus will promote the sound management of liquidity risk in IIFS. The objectives of this Guidance Note are as follows:

1. to complement other prudential standards issued by the IFSB, as well as to support the harmonised application of the international regulatory regime in the area of liquidity risk management, by providing guidance on the application of global liquidity standards for the IIFS;
2. to provide guidance to supervisory authorities on the application of the LCR in their jurisdictions and on their role in assessing the discretionary items specified in this GN, including application of the alternative liquidity approaches (ALA);
3. to delineate the disclosure requirements required alongside the application of liquidity standards; and
4. to present the template of the net stable funding ratio (NSFR), which needs to be considered in the planning and monitoring of liquidity risk.

More information on the Public Hearings are available on the IFSB website www.ifsb.org. The contact person for the Hearings is Ms. Khairun Nissa Md. Zawawi (Email: [email protected], Tel: + 603 9195 1422, Fax: +603 9195 1405).