SWIFT, in collaboration with The Association of Islamic Banking Institutions Malaysia (AIBIM) and the Malaysian Islamic financial community, have announced that they will launch a new rulebook for the usage of SWIFT MT messages for Islamic finance.

Islamic finance is broadly defined as the financial services designed to comply with the principles of Islamic law. This rulebook will provide greater clarity around SWIFT MT message usage based on Islamic principles in order to enable straight-through processing (STP), thereby improving efficiency as well as reducing risk and cost. It will provide an efficient platform for exchanging Islamic finance messages and further promote the usage of message standards.

Islamic finance efficiency

Since 2013, SWIFT Asia Pacific Standards team has been working in close cooperation with the Malaysian Islamic financial community to develop STP-enabled financial messaging specific to the requirements of Islamic financial institutions. In 2010, SWIFT published the Murabaha Message Usage Guidelines describing the usage of MT messages for Treasury Murabaha, which includes a money transfer and a commodity trade, typically involving two banks and two brokers.

"This initiative marks a significant development in furthering the level of efficiency for Islamic finance transactions particularly, in ensuring compliance to Shariah requirements," says Yusry Yusoff, Executive Director of The Association of Islamic Banking Institutions Malaysia.

Rule book availability

The SWIFT Islamic Finance Rulebook will be available to the Message User Group (MUG) by the end of 2014. The MUG is a group of users that have registered to use specific messages within a controlled user community. The MUG is open to all markets, globally, that wish to utilise financial messaging compliant with practices in the Islamic finance industry. It is available for Islamic Finance practice covering all FIN MT messages. The MUG also acts as a good registration mechanism for adherence to this Islamic Finance Rulebook and enforces processing of messages in accordance with the Islamic Finance practice.