The news that London has finally issued its maiden sukuk has everyone excited that Islamic finance could become a viable option for corporates in the western world. However, alongside the jubilation comes another round of inevitable discussions about competition between finance centres vying to gain the biggest slice of the lucrative shariah market.
Indeed, London's debut sukuk is a clear signal of the government's intention to position the UK as a leading hub for Islamic finance. But in the same way that people don't worry about what will happen to the bond market in London because of business hubs in New York and Hong Kong, there is no need for concern that the rise of one Islamic centre means the demise of another. To view the market in such binary terms is to simplify the reality of how deals get done.
Islamic finance markets are active around the world. Dubai is the key regional player in the Gulf, and Malaysia, with its deep domestic market and strong government support, is the dominant player in Southeast Asia.
London itself is a global finance hub. Many cross-border Islamic finance transactions are governed by English law, and the deals are structured out of London.
South Africa, Hong Kong and Luxembourg have also expressed interest in selling Islamic bonds of their own.
There is no reason why all these centres can't work collaboratively together, or why success for one jurisdiction equates to lack of success for another.
Islamic finance is a new and, at present, small industry – there's a lot of room for growth. Interest and engagement from a broad range of markets should be welcomed. A vibrant sukuk market requires the involvement of finance centres around the world.
News that a majority non-Muslim country such as the UK is aspiring to be the global leader of Islamic finance – and is intending to show that it's not a product for Muslims but rather a deal structure that is open to everyone – is a positive development for the industry.
The lawyers that work on these deals frequently testify to the collaborative ethos involved, with counsel around the world working together and staying in close – often daily – contact. Where they do admit to any rivalry, they say it is always friendly.
The fact that many sukuk are dual-listed, typically in the domestic Gulf market and EU, is a practical demonstration of this cooperation.
It's time for the media to stop scaremongering. The Islamic finance industry has enough growth potential to accommodate all players.