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Wethaq announced that it has issued the first pilot Sukuk on its securities market infrastructure for the Islamic capital markets under the supervision of the Dubai Financial Services Authority on Sunday, 17th November.
Al Ghurair Investments LLC (AGI) acted as the issuer, advised by Mashreqbank PSC acting as lead arranger, R3 as protocol provider, Clifford Chance as legal counsel and the Dubai Islamic Economy Development Centre as mentor.
There is substantial demand for Sukuk issuances globally with a significant number of them offered out of the Dubai International Financial Centre (DIFC). This pilot issuance demonstrated how Sukuk issuances can become more accessible with the application of financial technology to the issuance process which is, at present, manual, non-standardised and fragmented.
Wethaq consolidates and automates the agency and infrastructure services required in the entire lifecycle of Sukuk product while enabling transaction participants and their service providers to interact more efficiently through digitized workflows.
Wethaq's fintech infrastructure is developed on R3's Corda Protocol integrating SWIFT payment and settlement functionality through SWIFT gpi Link and, as a result, integrates with incumbent market infrastructures and avoids digital currencies and 'tokenisation' of securities. By using gpi Link, Wethaq will be able to seamlessly integrate SWIFT's global payments innovation (gpi) service into its platforms, opening itself up to more than 3,500 banks around the world using the service.
The session was opened by Bryan Stirewalt, Chief Executive of the DFSA, who said that: "The DFSA's Innovation Testing Licence (ITL) programme is successfully encouraging and enabling innovation in the DIFC. Wethaq's pilot issuance is a great example of this effort and a great example for the future of Islamic finance. Innovation is pushing the boundaries of financial services through these new technologies as we witness their integration into existing and evolving business models."
Mohammed Alsehli, CEO of Wethaq (Capital Markets) said that: "We are pleased to have achieved this milestone under our Innovation Testing Licence from DFSA with the generous support of the DIFC ecosystem. We are one step closer to releasing our infrastructure to the market and facilitating the Islamic capital market to reach its 4x growth potential."
At the event, Nabeel Waheed, AGI Group CFO, said "With this pilot, AGI is delighted to be the issuer of the first fintech Sukuk – a first of its kind globally. This pilot issuance matches AGI's philosophy to be innovative and be early-adopters of technology across all our platforms. We believe this market infrastructure is well positioned to combine finance and technology to expand Islamic Finance. We thank Mashreq & Wethaq for their association and support in this groundbreaking initiative."
Ahmed Abdelaal, CEO of Mashreq Bank, said: "At Mashreq, we recognize and embrace that our clients have a unique and diverse range of capital raising requirements and it is our strategic priority to provide them with innovative state–of-the-art solutions that meet their specific demands". He added: "We continue to be at the forefront of digital transformation and our collaboration with a leading fintech company to positively disrupt market convention is an important milestone in that journey. We are proud to be associated with the Wethaq – a platform that shall enable issuers, new and old, to raise Islamic capital via Sukuk."
Cathy Minter, Chief Revenue Officer at R3, said: "Wethaq's contribution to the Sukuk market represents an important step in bringing the benefits of automation in Islamic capital markets. Its collaboration with the DFSA reflects R3's own ethos of working closely with regulators to achieve sustainable results for the industries we are looking to transform. As such, we are proud that our Corda platform can enable Wethaq to deliver the promise of distributed ledger technology to Islamic capital markets. We look forward to seeing Wethaq achieve continued success."
Jack Hardman, Counsel, and Rafe Khokhar, Senior Associate, at Clifford Chance said: "We are delighted to be involved in this landmark project. Wethaq's pilot issuance marks an important milestone in the development of fintech solutions for Sukuk transactions and we are excited by the potential application of the Wethaq technology in debt capital markets generally."
Onur Ozan, Head of Middle East, North Africa & Turkey, SWIFT, said: "We are delighted that Wethaq has chosen to integrate SWIFT gpi into its new infrastructure using SWIFT gpi Link, a gateway to interlink ecommerce and trading platforms with SWIFT gpi. It will enable the platform to offer fast, secure and transparent settlement provided through the SWIFT gpi banks."
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