DFSA lays down the rules at International Islamic Finance Forum

Addressing delegates on Regulatory Environment, Corporate Governance and Media Perceptions on day two of the high-level three-day event, Hari Bhambra, Senior Manager - Supervision at DIFC Financial Services Authority (DFSA), said, "Systems and controls must be in place to ensure that the firm complies with Shari'a. This responsibility rests with senior management. The key is to keep the SSB and the board separate."

While a company's board would hold ultimate responsibility for the organisation's operations, including its general compliance with DIFC's regulatory framework, as well as its Shari'a aspects, the SSB would be responsible for approving the Shari'a aspects and reporting to DFSA, said Bhambra.

Under DFSA's three-tier legal and regulatory structure relating to Islamic finance, 'Regular Law' gives the regulator the power make rules, which it has laid out in 'The DFSA Rulebook'. The requirement to appoint SSBs is prescribed in a separate 'Law Regulating Islamic Financial Business'. DIFC's third legal and regulatory component, 'Markets Law', is under development, said Bhambra.

According to Bhambra, The DFSA Rulebook reflects, "A balanced approach, reflecting similarities and differences between Islamic finance and conventional finance." It also provides flexibility within defined parameters, she added.

Joining Bhambra on the forum platform was Loutfi Echhade, Senior Audit Partner, Ernst & Young, Saudi Arabia. Echhade said members of an SSB - an independent body of jurists specialised in Fiqh almua'malat (Islamic commercial jurisprudence) - should be appointed by shareholders in their annual general meeting.

The other expert speakers at the morning session were Dr Zaha Rina Zahari, CEO RHB Securities, Malaysia, (chair); Fathi Ridzuan Ahmad Fauzi, Head of Exchanges at Bursa Malaysia Berhad; Farhan Bokhari, correspondent for the Financial Times in Pakistan; and Hajj Abdalhamid Evans, Director of Research and Intelligence at The Halal Journal, Malaysia.

"The presentations by our distinguished panel of experts confronted some of the most important challenges facing the Islamic finance industry," said forum director Chris Mullinger. "The role of regulators, exchanges and industry organisations were thoroughly examined from a practitioner's perspective."

The 2005 International Islamic Finance Forum is organised by IIR Middle East, in association with DowJones Indexes and Saudi Economic & Development Company (SEDCO), Saudi Arabia.