The first Sharia-compliant repurchase transaction (Islamic repo) took place between two financial entities listed on the Saudi market over the past few days.
According to Al-Iqtisadiah newspaper, the Islamic repo operation is the first of its kind in the Saudi banking sector. Indeed, this newly developed Islamic product is the most prominent of the major events accomplished. Public sector in the Islamic financial sector, as it contributes to strengthening efforts aimed at unifying the Sharia structuring of the banking product.
The institutions operating in the financial sector implement repo according to a specific Sharia agreement and a unified product structure.
and the regulations approved by the depository company during the past month regarding the launch of the guarantee transfer service with repurchase contracts paved the way for the implementation of the first Islamic repo deals in the Saudi market, so that this event would be a point. An important transformation for the local banking sector and the money market in particular, as it will provide Sharia-compliant financial institutions with a cost-effective and efficient tool for managing short and medium term liquidity.
The sources indicated that government sukuk and private sector sukuk can all be used with the service of transferring guarantees for repo contracts, indicating that the association of using Islamic repo with government sukuk will provide additional liquidity solutions for all Domestic and foreign investors.
and the presence of the repo helps to mortgage the instrument and provide liquidity to its holder at any time. The introduction of the liquidity management product in the Saudi market will contribute to enhancing the investors' ability to raise their shares of the sukuk due to the presence of a solution that provides them with liquidity in an orderly, fast and easy manner.
