Following the recent IFN Investor Forum in Kuala Lumpur on the 21st September 2016, IFN published the following article:-
The growing sophistication of Muslim investors increasingly looking to incorporate SRI principles on top of greater efficiency and stronger governance into their Shariah compliant investment strategies has led one London-based Islamic finance intermediary firm on a decade-long journey to engineer a bespoke Shariah compliant trade platform.
DDCAP Group, at the IFN Investor Forum which gathered 338 Islamic finance practitioners from across Europe, Africa, the Middle East and Asia in Kuala Lumpur yesterday, launched the Ethos Asset Facilitation Platform™ (ETHOS AFP™), a real-time trade and post-trade services platform providing 24-hour coverage, enabling investors to purchase from a diverse asset inventory via a secure web-based portal.
“Historically, one of the biggest issues with Shariah compliant transactions is that they are very cumbersome with a lot of paperwork involved. The Ethos platform enables you to effectively arrange transactions in seconds while at the same time, full documentation is available ensuring you’re still adhering to Shariah stipulations,” explained Lawrence Oliver, a director and the deputy CEO of DDCAP.
The ETHOS AFP™ accommodates specific trade and post-trade requirements relating to financial contracts within the Shariah compliant and responsible finance universe and employs stringent governance, risk management and compliance mechanisms.
In addition to regular Shariah screening, transactions executed on the paperless platform are randomly selected and subjected to independent review in accordance with the International Standard on Related Services 4400. DDCAP has integrated its own responsible business-based principles as well as Shariah-focused requirements of its clients and Shariah supervisory board into ETHOS AFP™. Asset allocation could also be overlaid with requisite, regulatory-driven compliance and governance stipulations, including sanctions-related protocols or responsible investment and financing considerations at the direction of investors.
“We started work on this process over 10 years ago with a bank in Abu Dhabi and we’ve had great support from numerous scholars who had their own test platforms to experiment with and provide us guidance,” said Stella Cox, the managing director of DDCAP. “In automation, we gain greater efficiency and mitigate operational risks in a post-trade environment; the concern however is that there should not be a compromise on Shariah stipulations – so it has been a gradual process for us to make sure we are engaged with the right stakeholders to ensure we have the right system in place.”