The EU Framework for Islamic Securitisation and Sukuk in the Times of Brexit

Abstract

The United Kingdom is an indisputable hub for Islamic Finance in Europe while English common law is widely used for securitisations, including Islamic securitisations of which products are asset-backed securities called “Sukuk”. Thus, the question of whether the applicable EU law provides a platform for issuing Sukuk will become highly relevant after the United Kingdom leaves the European Union. The paper defines the notion of Sukuk and Islamic Securitisation and focuses on the relevant European Union legislation in force today and in the future. The conclusion is that under the currently effective legislation Sukuk, as securitisation products, might take the form of asset-backed securities under the Commission Regulation (EC) No 809/2004 of 29 April 2004. On the other hand the new comprehensive framework for securitisations contained in the Regulation (EU) 2017/2402 of the European Parliament and of the Council of 12 December 2017 will not be applicable to the issuance of Sukuk.

Keywords: Sukuk, Islamic, securitization, Brexit, European Union, asset-backed security, CRR, MiFIR, Securitisation Regulation