Sukuk Templates, Porsche-VW Suit, Citigroup: Compliance

The International Islamic Financial Market is working on common templates for structuring sukuk to reduce delays caused by disagreements among Shariah scholars.

The standards-setting body is drafting frameworks starting with leasing contracts known as Ijara, Chief Executive Officer Ijlal Ahmed Alvi said in a May 6 interview in Jakarta.

Worldwide Islamic debt sales have grown by an average of 35 percent during the past five years, straining the ability of religious experts to approve offerings and highlighting the need for common global standards.

All of the $13.9 billion of outstanding Indonesian government sukuk as of the end of 2013 used the Ijara structure, according to a March report by the Asian Development Bank. In Malaysia, only about 10 percent of the $163.5 billion of Islamic debt is Ijara-based, according to the report.

The templates may also help address an international shortage of scholars.

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Compliance Action

Firms Should Use One Combined Charge Figure, FCA Says

The U.K. markets regulator has investigated how clearly funds design and communicate their charging structure to clients.

Some firms didn’t provide investors with a clear figure, according to the Financial Conduct Authority.

The FCA is encouraging firms to respond to its findings and adopt clarity and consistency in their communications.

The regulator reviewed marketing information of 11 firms, and will follow up with a review of firms through supervision.


Porsche May Win Dismissal of VW Option Suit, German Court Says

Porsche Automobil Holding SE may win dismissal of a lawsuit brought by Merkle Group, according to comments by the Braunschweig court at a hearing.

The suit claims Porsche manipulated Volkswagen AG shares in 2008 as part of a takeover bid and seeks about 213 million euros ($292 million).

The court’s assessment is preliminary and may change, said Presiding Judge Stefan Puhle, who scheduled a ruling for July 30.

The Merkle suit is one of half a dozen Porsche faces in courts in three German cities, with combined damages of more than 5 billion euros.

The case is LG Braunschweig, 5 O 2068/12.


CFTC Weighs High-Speed Trader Registration for Market Oversight

The main U.S. derivatives regulator is debating whether requiring a new registration for high-speed traders would give overseers better access to information collected by exchanges, including CME Group Inc.

The Commodity Futures Trading Commission, which regulates futures and swaps markets, is considering whether the additional reporting and record-keeping requirements would improve the agency’s direct surveillance of trades, Vincent McGonagle, director of the CFTC’s market oversight division, told senators May 13 at a Senate Agriculture Committee hearing in Washington.

Terrence Duffy, executive chairman of CME Group, testified that the exchange already has data on high-speed trading firms and registration wouldn’t improve market information.

The CFTC last year asked for feedback on possible new regulations. McGonagle said the agency’s staff is reviewing the comments and considering whether to recommend additional rules to commissioners, whose approval is needed for any new requirement.

Comings and Goings

Citigroup Fires 11 More People Amid Probe of Banamex Loan Fraud

Citigroup Inc., investigating a $400 million loan fraud at its Mexico unit, fired 11 people, including four managing directors, for failing to prevent or discover the wrongdoing, according to a memo sent yesterday and signed by Chief Executive Officer Michael Corbat.

A Citigroup spokesman confirmed the contents of the memo.

The Banamex investigation is continuing and more employees inside and outside Mexico may be punished, according to the memo. Citigroup previously fired one person.

Citigroup said in February that invoices backing as much as $400 million of loans to Oceanografia SA, an oil-services firm, were found to be fraudulent. U.S. agencies also are investigating.

“There will be accountability for those who perpetrated this despicable crime and any employee who enabled it,” Corbat said in the Feb. 28 statement disclosing the fraud and a $235 million cut to 2013 earnings.

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