REGULATIONS - IFSB - Commodity Murabahah and Investment Account Holders (Dec 2010)

The IFSB issued 2 new Guidance Notes :

Guidance Note in Connection with the Risk Management and Capital Adequacy Standards: Commodity Murābahah Transactions (CMT); 

GN-2 aims to highlight the risks associated with Commodity Murābahah Transactions and to guide supervisory authorities in their assessment of their implications with regard to the regulatory capital requirements of institutions offering Islamic financial services (IIFS). In addressing these risk management and capital adequacy issues, the document complements the existing IFSB Guiding Principles of Risk Management for IIFS (IFSB-1) and IFSB Capital Adequacy Standard (IFSB-2), both of which were issued in 2005.


Guidance Note on the Practice of Smoothing the Profits Payout to Investment Account Holders.

GN-3 draws attention to the practice of smoothing the profits payouts to investment account holders by IIFS by highlighting a number of related prudential concerns with respect to corporate governance, transparency, capital adequacy and harmonisation of such practices. The document provides a framework and a number of best practices which will guide supervisory authorities in their evaluation and standardisation of profit payout smoothing practices in their jurisdictions. GN-3 complements a number of IFSB standards and guiding principles, including IFSB-1, IFSB-2, Guiding Principles on Corporate Governance (IFSB-3) and Disclosures to Promote Transparency and Market Discipline for IIFS (IFSB-4).

Source : http://www.ifsb.org/preess_full.php?id=157&submit=more - Dec 14, 2010