Islamic Finance Course at CFA

ACCORDING TO Arab News, the Charlottesville, Virginia-based CFA Institute will soon be offering a curriculum that includes “Islamic Finance.” The Institute has offices around the globe and promotes transparency, fairness, and ethical standards in the financial industry.

For religious reasons, Islamic societies traditionally forbid practices that are common in Western economies: the taking of interest on loans or the creation of money as interest-bearing debt, as practiced daily by commercial banks and central banks like the Bank of England in the UK or the Federal Reserve here in the United States.

But Islamic societies typically find other, sometimes very creative, ways of financing new enterprises or the expansion of existing ones, such as securitizing venture funds or the creation of ETFs (exchange-traded funds).

Arab News stated that “US-based Florentez Investment Management Inc. (ShariahShares ETF) is set to launch a family of Shariah-compliant exchange traded funds (ETFs) on the NYSE (New York Stock Exchange).” (Shariah means Islamic law, based on the Koran.)

Islamic investment pools and ETFs don’t list companies with high debt ratios. Some claim that this has helped them perform well during the current downturn, since they had little to no exposure to banks or highly-leveraged companies like Enron.

Arab News stated on Monday: “[Saeid Hamedanchi, head of ShariahShares] …emphasized the fact that CFA Institute that grants highly coveted Chartered Financial Analyst (CFA) designation from Charlottesville, Virginia, US, is planning to offer curriculum in Islamic finance and socially responsible investing/ethical investing (SRI). This clearly shows that Islamic finance has made it to mainstream in the financial services industry globally.”

According to Hamedanchi, even though the Islamic-linked funds don’t match the structure of typical U.S. investments, “The company has already received an exemptive relief order from the Securities and Exchange Commission (SEC), the US regulator, to launch the funds on the US exchanges.”

There are about 10 million Muslims now in the U.S., and many of them would prefer to invest in “Shariah-compliant” funds, Hamedanchi said.

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