London: The New Souk For Sukuk

Islamic finance is now the Buzz Topic in the City of London. While the Middle East’s economies thrive and prosper, the enormous funds generated are seeking the best opportunities for investment the markets can offer. The Chancellor, Gordon Brown - perhaps the next Prime Minister- has been key to the debate; last month, he announced in his budget that Sukuk were to be given equivalent tax treatment to traditional interest-bearing bonds. The intention is that the City should eventually compete with Dubai and Kuala Lumpur in the development of new financial instruments which comply with Shariah law.

Although Shariah law prohibits certain activities, including the earning of interest, speculation, contracts which have an element of uncertainty and transactions which are overly advantageous to one party at the expense of another, the Islamic finance industry has developed various structures in order to meet the financing needs of businesses and investors who wish to comply with Shariah.