DUBAI, 8 November 2006 — Dubai Financial Market (DFM) yesterday announced that it has commenced the process of converting itself into the first international Islamic stock market. A Shariah committee recently issued a fatwa (edict) approving this step and stating that DFM is Shariah compliant.
The key decision made by DFM aims at attracting a wide spectrum of local and international companies that would like to be listed on a Shariah-compliant stock market. DFM will continue to provide its bouquet of services, but the revenues that are generated from trading fees will be split into conventional and Shariah-compliant income.
DFM will maintain two separate books of accounts for each type of revenues and will share the details with investors on a regular basis to maintain its perpetual policy of transparency.
Essa Kazim, director general of DFM, said: “We are extremely proud to announce this landmark decision.
The decision made by the DFM board to become the first international Islamic stock market comes in response to demand from local, regional and international companies that would like to be traded on a fully Shariah-compliant stock market.”
“The fact that 98 percent of DFM’s revenues generated from trading fees accrue from companies that are Shariah compliant and only 2 percent accrue from conventional companies made the process of conversion much smoother. In addition, DFM’s excess liquidity was always channeled in to Shariah-compliant investments,” he added.
“The Shariah compliance is a result of pent up demand for Islamic products and services worldwide, and is in sync with Dubai’s pole position as the Islamic financial hub in the world,” Kazim said.
A statement from the fatwa committee, headed by Dr. Hussain Hamed Hassan, stated that: “DFM’s decision to become a joint stock company complies with Shariah rules and principles. Its operations are Shariah compliant and the company holds no liabilities and has no investments that contradict with the Shariah rules and regulations. DFM is allowed to maintain two books of accounts and therefore buying and selling of its shares is halal.”
A Shariah board comprising three highly qualified scholars with extensive experience in the financial markets will supervise DFM transactions and will be instrumental in structuring its future operations.
