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The 2010 Tahawwut Master Agreement: Paving the Way for Shari'ah-Compliant Hedging

16 Pages Posted: 1 Sep 2010 Last revised: 25 Apr 2012

Richard Fagerer

Fulbright & Jaworski L.L.P.

Michael E. Pikiel Jr.

Fulbright & Jaworski L.L.P.

Michael J. T. McMillen

Curtis, Mallet-Prevost, Colt & Mosle LLP; University of Pennsylvania Law School

Date Written: April 25, 2012

Abstract

Modern Islamic finance remains in its infancy, having emerged only in the mid-1990s. Despite exceptional growth rates, Islamic finance is essentially devoid of derivatives products, in part due to doctrinal constraints and due in part to the infancy of the industry. In March of 2010, after years of effort, the International Swaps and Derivatives Association (ISDA) and International Islamic Financial Market (IIFM) released The 2010 Tahawwut Master Agreement for the standardized effectuation of certain swaps and derivative transactions that are compliant with the principles of Islamic Shari`ah. This paper analyzes certain provisions of The 2010 Tahawwut Master Agreement and compares those provisions with ISDA’s 2002 Master Agreement.

Keywords: Tahawwut, Derivatives, Swaps, Hedging, Foreign Exchange, ISDA, Murabaha, Musawama, Islamic Finance, Islamic Banking, Shari`Ah

JEL Classification: F31, F34, K12, K29

Suggested Citation

Fagerer, Richard and Pikiel, Michael E. and McMillen, Michael J. T., The 2010 Tahawwut Master Agreement: Paving the Way for Shari'ah-Compliant Hedging (April 25, 2012). Available at SSRN: https://ssrn.com/abstract=1670118 or http://dx.doi.org/10.2139/ssrn.1670118

Richard Fagerer

Fulbright & Jaworski L.L.P. ( email )

United States

Michael E. Pikiel Jr.

Fulbright & Jaworski L.L.P. ( email )

United States

Michael J. T. McMillen (Contact Author)

Curtis, Mallet-Prevost, Colt & Mosle LLP ( email )

101 Park Avenue
35th Floor
New York, NY 10178-0016
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+1-212-696-6157 (Phone)

University of Pennsylvania Law School ( email )

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Philadelphia, PA 19104-6204
United States
1-610-865-1295 (Phone)

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