UAE rules governing Sukuk offerings could support market activity together with other regulatory initiatives, although consistent adoption and implementation remains key to their success.
In a market commentary, Fitch Ratings explained that the SCA regulation provides a general framework for disclosure around these issues, not a detailed template and including this information would not eliminate the potential for conflicts with investors.
The UAE's Securities and Commodities Authority (SCA) announced that issuers of Islamic securities should improve disclosure, including in key areas such as potential disputes relating to Shari'ah compliance.
In addition, the SCA set out basic provisions for the composition and responsibilities of Shari'ah boards. It also said that issuers should outline how inconsistencies between International Accounting Standards (IAS) and those of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) would be addressed.
Nevertheless, regulation is one of a number of initiatives that, over time, could support the UAE's Sukuk market, said Fitch.