The Treasury has implemented measures designed to support Islamic finance in the UK.
The Financial Services and Markets Act 2000, order 2010, provides clarity on the regulatory treatment of corporate sukuk, helping to remove legal costs for the investments and removing obstacles to their issuance.
Sukuk are a class of financial instruments which replicate the economic function of bonds, but within a framework that complies with Islamic principles, which prohibits the charging or paying of interest.
In order to get around this, the issuer of a sukuk sells an investor group the certificate who rents it back to the issuer at a preordained rental fee, and makes a contractual promise to buy back the bonds a future date at par value.
Exchequer Secretary to the Treasury Sarah McCarthy-Fry MP says: "The Government's objectives on Islamic finance are to enhance the UK's competitiveness in financial services by maintaining the UK's position as a Western leader for international Islamic finance; and to ensure that everybody, irrespective of their religious beliefs, has access to competitively priced financial products."
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