Given the increasing importance of Islamic banking and finance in Pakistan, it is important to deepen the Islamic financial market in the country. One way of doing so is by developing a market for Islamic hedging instruments, which are known as derivative contracts in conventional finance. It is, however, important to understand the difference between Islamic derivatives and their conventional counterparts.
Financial engineering in Islamic banking and finance has resulted in a number of Islamic options, forward and futures contracts that may be used for risk management and hedging. It must, however, be emphasised that trading in options (rights to buy and sell), forwards and futures contracts is not permissible under Shariah. The use of such contracts is permissible solely for hedging purposes, and not for pure speculative reasons………………………………………..Full Article: Source

Communications and consultancy firm Sustainable Options Ltd has announced the launch of the Sustainable Resources Fund, an open ended hedge fund that offers appeal to both green and Islamic investors. The fund aims to raise $100m for investment in a mix of agro-forestry, land and sustainable agricultural sectors.
In an e-mailed statement, Sustainable Options’ Founder and Managing Director Stuart Andrews said that the fund has appointed Alpha Wealth Management as investment manager and Apex Fund Services as fund administrator. The combined skills of Alpha Wealth Management and Apex Fund Services are expected to provide prudent diversified investments across geographically diverse regions, different species and plantations to reduce project specific risk. “Utilising tough ethical, environmental and commercial criteria to each investment, their mission statement is to generate wealth through sustainable resources,” Andrews said………………………………………Full Article: Source

Anyone who has been involved in the Islamic finance space for any length of time will know that there has been a long running debate about whether or not hedge funds have any place in Islamic finance.
Naysayers, in my own view, belong in the same club as people who said ‘no’ to the invention of the wheel. Hedge funds can be a useful financial instrument for – guess what – hedging, and that can be a very useful thing in any modern portfolio………………………………………..Full Article: Source

HSBC Holdings Plc’s (HSBA) Islamic risk management business posted double-digit growth last year on rising demand for Shariah-compliant hedging and investment products.
“The depth and variety of these Shariah-compliant risk management products are now almost on par with conventional,” Abhishek Mishra, head of multi-asset structuring at HSBC Global Banking and Markets, Middle East and North Africa, said in an e- mailed statement. He forecasts similar growth in the bank’s Islamic hedging and investment business in 2012………………………………………..Full Article: Source

Arcapita Bank BSC, a manager of Islamic-compliant investments with $7 billion under management, was forced into bankruptcy by hedge funds that sought to be repaid in full, a lawyer for Arcapita said.
Restructuring talks on the company’s $1.1 billion loan due in March “were derailed when several hedge funds who bought that debt on the secondary market at a discount threatened an involuntary bankruptcy if they didn’t receive par” on their investments, attorney Michael Rosenthal told U.S. Bankruptcy Judge Sean Lane in Manhattan………………………………………..Full Article: Source

US hedge fund Davidson Kempner Capital Management is part of the creditor committee for the $1.1 billion debt restructuring at Bahrain investment house Arcapita, the first time a fund has fulfilled such a role in the Gulf.
Previous restructurings in the region, like Dubai World’s $25 billion debt deal, have been bank-only affairs, leading to long extensions as banks, concerned with provisioning, opaque legal remedies and maintaining relationships with local borrowers, adopted a conciliatory attitude………………………………………..Full Article: Source

Dubai Shariah Asset Management’s Cayman Islands-domiciled DSAM Kauthar Gold Fund is being offered to retail investors.
Rabih Kais, Head of International Business Development and Sales, confirmed it to CPI Financial. The fund invests primarily in the shares of precious metals producers. The fund has a minimum investment of $5000 for retail investors and $100,000 for institutional investors………………………………………..Full Article: Source

From Gulf-times.com: An Islamic finance research body backed by Malaysia’s central bank is drafting rules to regulate the use of derivatives to strengthen the industry’s risk management framework and repair the perception of poor Shariah compliance among banks.
The guidelines could help plug a yawning gap in an industry which has struggled to develop hedging tools that do not resemble betting instruments—a major handicap that can expose Islamic banks to excessive swings in currency and interest rate movements………………………………………..Full Article: Source

From Thestar.com.my: An Islamic finance research body backed by Bank Negara is drafting rules to regulate the use of derivatives to strengthen the industry’s risk management framework and repair the perception of poor syariah compliance among banks.
The guidelines could help plug a yawning gap in an industry which has struggled to develop hedging tools that do not resemble betting instruments a major handicap that can expose Islamic banks to excessive swings in currency and interest rate movements……………………………………….Full Article: Source

From Thejakartapost.com: Member countries of the International Islamic Financial Market (IIFM) may soon enjoy a hedging facility to reduce risks of financial transactions, officials say.
The IIFM’s Board of Directors agreed on Monday to implement a hedging facility for the sharia banking industry in the first half of next year amid global currency concerns……………………………………….Full Article: Source

From Dubaibeat.com: Dubai Shariah Asset Management’s $260 million fund of funds, which was launched at the beginning of 2009, posted a 41% return last year. According to Dubai Shariah Asset Management (DSAM) its fund of funds, DSAM Kauthar Commodity Fund, is drawing interest from major Islamic banks that cater specifically to wealthy clients seeking investments that don’t violate shariah.
The hedge fund experiment was a departure for the region’s investors, who traditionally put money into real estate, private equity or long-only mutual funds - DSAM says……………………………………….Full Article: Source

From Forbes: The International Islamic Financial Market and the International Swaps and Derivatives Association published the ISDA/IIFM Tahawwut (Hedging) Master Agreement this past spring. For the first time it provides Islamic financial institutions across the world a standardized toolkit for hedging risk.
–The Tahawwut Master Agreement is based on the 2002 (1992) International Swaps and Derivatives Association Master Agreement, a framework governing hedging transactions between conventional (i.e., non-Islamic) parties. It has been adapted to comply with sharia law following extensive consultations with sharia scholars and market participants………………………………………Full Article: Source

Reval, a leading global provider of risk management and hedge accounting solutions, announced today that Bank of London and The Middle East (BLME), one of the first Sharia’a-compliant banks in the world to qualify for hedge accounting under International Accounting Standard (IAS) 39, has deployed Reval Software-as-a-Service (SaaS) for a more robust and flexible solution for its hedge accounting requirements.
The bank has deployed Reval in place of its original in-house application primarily for fair-value hedging of its large portfolio of bond-like instruments, called Sukuk, and for cash flow hedging of its portfolio of deposits…………………………………………Full Press Release: Source

From IPE: Normally, hedge funds are so-called because they are highly leveraged, use derivatives and are able to employ short selling. They have no ethics-based restrictions, which is not meant as an insult. Islamic finance grates against all of these supposed freedoms.
Despite that, Islamic hedge funds have begun to trickle into the sharia funds marketplace lately…………………………………..Full Article: Source

From Thepeninsulaqatar.com: Standard Chartered Bank sees opportunities in Islamic derivative products but is steering clear of hedge funds, another grey area of Shariah-compliant finance, the head of its Saadiq unit said.

Afaq Khan, Chief Executive Officer of Standard Chartered Saadiq, said Islamic hedge funds were at the edge of development of the industry and many Islamic finance experts were hesitant to approve them………………………………………..Full Article: Source

From Themalaysianinsider.com: Standard Chartered Bank sees opportunities in Islamic derivatives products but is steering clear of hedge funds, another grey area of sharia-compliant finance, the head of its Saadiq unit said.

Afaq Khan, chief executive officer of Standard Chartered Saadiq, said Islamic hedge funds were at the edge of development of the industry and many Islamic finance experts were hesitant to approve them……………………………………….Full Article: Source

From sfgate.com: Get this: Middle East emirate’s first fund of funds, which was launched at the beginning of 2009, beat comparable indexes by posting a 41% return last year without taking on any debt.

Is that even possible? According to the Wall Street Journal, yes. A new fund of funds, Dubai Shariah Asset Management (DSAM), invests only in shariah-compliant strategies……………………………….Full Article: Source

From sfgate.com: Shariah Capital Chief Executive Eric Meyer, a practicing Catholic and former hedge fund manager, has worked closely with Islamic scholars to develop “sophisticated Web-based software for determining whether specific securities are Shariah compliant.”

Sophisticated is basically code for: he found a loophole. The new fund of funds has to comply with a set of rules to make sure its shariah-compliant:………………………………Full Article: Source

From WSJ: Dubai is opening up its inaugural hedge fund to investors after an index-beating debut. The Middle East emirate’s first fund of funds, which was launched at the beginning of 2009, beat comparable indexes by posting a 41% return last year.
The fund, up slightly more than 1% through March 28, is still outperforming benchmarks this year………………………………..Full Article: Source

From Klgates.com: In structuring the Ta’Hawwut Agreement, ISDA and IIFM have sought to provide a basis to hedge risks that are common in Shariah-compliant transactions in a Shari’ah-compliant way. There is a high correlation between Shariah-compliant investing and socially responsible investing.
Shariah investment is constrained by restrictions on the way in which transactions can be carried out and the purposes for which they are entered into. In particular, Shari’ah-compliant financial transactions may not involve “riba” (the charging of interest), “gharar” (unavoidable uncertainty) or “maysir” (gambling or speculation)……………………………….Full Article: Source

From Reuters: More sharia hedge funds are likely to be launched, specialising in healthcare, telecoms and technology stocks, a U.S. financial firm said, as the industry debates how far Islam sanctions such investments.

Few Islamic hedge funds have successfully gotten off the ground as asset managers struggle to reconcile the religion’s ban on excessive speculation with common hedge fund techniques such as short selling……………………………………Full Article: Source

From Business24-7.ae: Hedge funds are set to receive a larger proportion of the Middle East investor’s funds this year compared with 2009, a new survey has revealed. 90.9 per cent of respondents expect to either maintain or increase their allocations to hedge funds in 2010 while the remaining 9.1 per cent intend to decrease their hedge funds holdings this year.

The survey polled 66 respondents from across the Middle East, with 27.3 per cent of them from the UAE, followed by 21.2 per cent from Bahrain, 18.2 per cent from Kuwait and 13.6 per cent from Saudi Arabia among others………………………………………Full Article: Source

From Fointelligence.com: Islamic finance specialists gave a cautious welcome this week to the new Isda/IIFM Tahawwut (Hedging) Master Agreement for Islamic derivatives.

The long-awaited document, prepared by the International Swaps and Derivatives Association and the International Islamic Financial Market, is a standardised form for Islamic derivatives transactions……………………………………….Full Article: Source

From Cpifinancial.net: The International Islamic Financial Market (IIFM) and the International Swaps and Derivatives Association (ISDA) have launched the ISDA/IIFM Tahawwut (Hedging) Master Agreement.

The development is a breakthrough in Islamic finance and risk management, and marks the introduction of the first globally standardised documentation for privately negotiated Islamic hedging products. The ISDA/IIFM Tahawwut (Hedging) Master Agreement is the first financial industry framework document that is applicable across all jurisdictions where Islamic finance is practiced……………………………………….Full Article: Source

From Gulf-daily-news.com: The International Islamic Financial Market (IIFM) and the International Swaps and Derivatives Association, (ISDA) launched the ISDA/IIFM Tahawwut (Hedging) Master Agreement at a meeting in Bahrain.

The development is a breakthrough in Islamic finance and risk management, and marks the introduction of the first globally standardised documentation for privately negotiated Islamic hedging products……………………………………..Full Article: Source

From Risk.net: Bahrain is keen to attract and grow the alternative asset management sector, including hedge funds, according to Sheikh Salman Isa Al Khalifa, executive director of banking operations at the Central Bank of Bahrain.
Al Khalifa said the Kingdom was well placed to encourage the sector’s growth, particularly for funds and managers that want access to the $1 trillion economy offered by the countries of the Gulf Co-operation Council (GCC). He also said Bahrain was a good base from which to access other states in the Middle East and North Africa…………………………..Full Article: Source

From Gulf-daily-news.com: Gulfmena Investments has announced the launch of a new fund. The Gulfmena Arab Opportunities Fund Limited is the first directional absolute return hedge fund focusing specifically on the Middle East and North Africa (Mena) equity markets to be managed by a GCC-based and Dubai Financial Services Authority (DFSA) regulated asset management business.

The asset manager of the fund, Gulfmena Alternative Investments, was granted a licence by the DFSA to operate as a DIFC asset management company in August and is headed by chief executive and fund manager Haissam Arabi……………………Full Article: Source

From Dow Jones: U.S.-based Tocqueville Asset Management LP’s Shariah-compliant gold hedge fund is outperforming both the metal’s price and its Philadelphia index year-to-date, delivering a similar performance to its other gold investments.

That performance should continue, portfolio manager John Hathaway told Dow Jones Newswires, because he forecasts gold to trade into the quadruple digits and stay there………..Full Article: Source

From Asianinvestor.net: Douglas Johnson, New York-based principal at Calyx Financial, a hedge fund group that delved into the world of Islamic finance, has spun off sharia-compliant services into a new firm, Codexa Capital.

Codexa will serve as an Islamic finance brand, while Calyx Offshore has been restructured as a conventional hedge fund and private-equity manager and placement advisor………Full Article: Source

From Bi-me.com: A new global study of institutional investors, investment consultants and hedge funds released today by The Bank of New York Mellon and Casey, Quirk & Associates highlights the role of oil prices and high net worth investors in the continued growth in hedge fund investment across the Middle East region.
The Middle East has not been a major source of outflows over 2008-2009, accounting for less than 3% of total global outflows. Redemptions were concentrated in the high-net-worth segments, both family offices and bank platforms…..Full Article: Source

From Reuters: Hedge funds basing their investment strategy on sharia, or Islamic legal principles would face significant disadvantages compared with non-sharia hedge funds, some exponents of Islamic finance say.

Many strategies would be difficult to achieve because they would be too expensive to perform in a Sharia-compliant way, or because the tools themselves would be inappropriate under Sharia law…..Full Article: Source

From Reuters: Islamic hedge funds can add to market liquidity, Malaysia’s capital markets regulator said on Thursday, amid some scholars’ criticism that such funds open the back door to gambling in Islam.

Hedge funds have been blamed for the recent rout in financial stocks but some bankers say hedge fund tools such as derivatives can help Islamic banks manage risks as the industry grows beyond its traditional niche markets…..Full Article: Source

From Reuters: Dubai-sponsored Islamic hedge fund platform Al Safi is planning a foray into private equity by the end of this year, the scholar sanctioning its Islamic compliance said on Wednesday.

Yusuf Talal DeLorenzo, chief sharia officer at U.S. fund manager Shariah Capital, said the Al Safi platform could also offer up to five long/short equity hedge funds…..Full Article: Source

From Ameinfo.com: At the Hedge Funds World Middle East Conference in Dubai last month, Shariah Capital, Inc. and Barclays Capital shared the ‘Best Islamic Alternative Investment Product’ award.
The award was given for their Al Safi Trust, the comprehensive Shariah compliant platform, primarily for single strategy hedge fund managers, that provides Shariah screening and arboon sale solutions along with prime brokerage, administration and independent trustee oversight — all within a one-stop, pre-established Cayman trust framework…..Full Article: Source

From Ameinfo.com: At the Hedge Funds World Middle East Conference in Dubai earlier this month, Eric Meyer, Chairman and CEO of Shariah Capital, received the ‘Special Merit Award for Outstanding Industry Contribution’ for his work developing Shariah compliant hedge funds, funds-of-hedge funds and customized Shariah compliant financial product platforms.
In 1998, Forbes magazine identified Eric Meyer as ‘an emerging force’ in hedge fund investing and in 2005 Banker Middle East magazine characterized him as ‘a pioneer in Islamic finance.’….Full Article: Source

From Thenational.ae: The government-owned Dubai Sharia Asset Management (DSAM) on Tuesday launched five Sharia-compliant hedge funds with US$200 million (Dh734.6m) in government seed money.

DSAM also offers a platform for third parties seeking to launch their own Sharia-compliant hedge funds….. Full Article: Source

From Reuters: Amiri Capital, the Islamic asset manager backed by investment firm Olivant, said on Monday it has teamed up with broker Newedge to launch the first Islamic fund of long/short hedge funds marketed in the Middle East.

The partnership with Newedge — itself a joint venture between Calyon and Societe Generale - allows Amiri to launch the fund, which was put on hold when original partner Lehman Brothers filed for bankruptcy protection in September….. Full Article: Source

From Zawya.com: Regional high net worth and institutional investors are increasingly seeking safer and more acceptable ways to invest their capital. Islamic finance may be an attractive option say experts who are convening in Dubai later next month to discuss innovations in the hedge fund industry, particularly as they relate to the Middle East.

Hedge Funds World Middle East, a conference celebrating its 10th anniversary in 2009, will highlight strategic Shariah-compliant initiatives and instruments by leading regional and global institutions this year….. Full Article: Source

From Arabianmoney.net: The Dubai Shariah Hedge Fund Index launched by Shariah Capital with the Dubai Multi Commodities Centre Authority, the first published index comprised of Shariah compliant hedge funds, reported its first full month of performance in January. The index was up 1.53%.

This performance is significant for two reasons, says Shariah. First, it underlines the exceptional quality of its managers. …. Full Article: Source

From Financialstandard.com.au: Shariah-compliant hedge funds could outperform their traditional hedge fund counterparts this year, predicts Aureliano Gentilini, global head of hedge fund research at Thomson Reuters Lipper.

Gentilini said that Shariah-compliant hedge funds stand to benefit from emerging trends in the investments industry and developments in the Gulf Cooperative Countries namely the Persian Gulf states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates….. Full Article: Source

From Albawaba.com: The Dubai Multi Commodities Centre Authority (DMCCA) and Shariah Capital, Inc. (SCAP.L) today announced the Dubai Shariah Hedge Fund Index, the first internationally-recognised index comprised exclusively of Shariah compliant hedge funds.

The Dubai Shariah Hedge Fund Index will be calculated and reported by Thomson Reuters, the global news and financial information organisation….. Full Article: Source

From Arabianmoney.net: Hedge funds with no leverage, options or futures might sound like a product stripped to the bare essentials of short and long equity strategies, but that has not deterred the $50 million seeding of the BlackRock Global Resources & Mining Fund by the Dubai Multi Commodities Centre.

At a press conference today fund arrangers Barclays Capital and Shariah Capital refused to give a target for how much the fund intends to raise when it goes public in December. However, the DMCC has now seeded four Islamic hedge funds with a total of $200 million and hopes for billions of dollars in subscriptions….. Full Article: Source

From Guardian: Islamic asset manager Amiri Capital will launch a sharia hedge fund next year, which it hopes will satisfy rising demand for alternative Islamic investments while complying with a religious ban on gambling.

In many segments of the Islamic finance sector, demand far outstrips assets on offer with investors seeking more sharia investments that yield competitive returns without sacrificing Muslim values….. Full Article: Source

From Finalternatives.com: Faced with increasingly wary Western investors, hedge funds are setting their sights on untapped capital pools in the Middle East. Wealthy families from the region are looking for sources of investment returns outside the region, and are growing more receptive to alternative investments like hedge funds.

For Western fund managers, however, this financial lifeline often comes with conditions in the form of Islamic laws, also known as Shariah, which lay out a moral code for how money can be used and, more importantly, how it cannot be used…… Full Article: Source