Understanding The Shari'ah-Compliant Hedging Master Agreement ­ Part II

On March 1, 2010 after many months of work, the International Swaps and Derivatives Association and the International Islamic Financial Market jointly issued the first Shari'ah-compliant master agreement for over-the-counter derivatives. Named the "ISDA / IIFM Ta'Hawwut Master Agreement," it provides a framework for the expansion of derivatives activity in the Middle East, South Asia and many regions throughout the world where hedging is not standard practice. Part I focused on derivative transactions within Shari'ah-compliant finance principles, and in Part II, we look at some of the differences between the Ta'Hawwut Agreement and the 2002 Master Agreement.