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.
The Before And After
The Ta'Hawwut Agreement is heavily based on the 2002 Master Agreement and follows a similar layout and style. Important provisions such as the liability for indemnified taxes, events of default, termination events, governing law, cross-transaction payment netting and set-off are similar to those in the 2002 Master Agreement. ....