Market defends complex sukuk structures

Author: | Published: 30 Nov 2011

Dubai’s Islamic finance industry has hit back at its regulator’s criticism of the complexity of its products, claiming that the involvement of scholars and increasing investor caution is driving more complicated structures, not lawyers.

It may also turn companies off listing sukuk on Nasdaq Dubai.

Speaking at the International Bar Association’s annual conference on October 31, Dubai Financial Services Authority’s (DFSA) head of Islamic finance, Peter Casey, said that overly-complex Islamic finance structures such as the recent Nakheel trade creditor sukuk leave open the potential for legal challenges.

“All it does is give lawyers the opportunity to raise a new set of issues and to try it on on behalf of their clients,” said Casey.

Citing the Nakheel sukuk specifically for having 17 pieces of legal documentation, warning that its complexity gives vulture funds the opportunity to find loopholes. “The...