Blockchain supports growth of sukuk industry: report

Blockchain will help reduce the costs and time involved in issuing a sukuk, which is currently greater than for a conventional bond, Moody’s Investor Service said in a report.

“Issuing a sukuk generally includes complex legal documentation, unlike a conventional bond issuance,” it said, stating blockchain will improve operational efficiency, transparency, and regulatory oversight and reporting.

Last year, S&P Global Ratings also said blockchain and smart contract protocols could change the global sukuk industry for the better, through minimizing costs by streamlining back-office operations, as well as shortening clearing and settlement times.

Read: Is blockchain the future of the sukuk industry?

In November 2018, the Saudi-based Islamic Corporation for the Development of the Private Sector announced plans to introduce digitization such as blockchain technology to Islamic financial services.

Read: Saudi ICD aims to attract new corporates to sukuk markets: CEO

Moody’s expects the sukuk market to grow steadily with total sukuk issuances forescast to be around $130 billion this year, up 6 percent from 2018, driven by the Gulf Co-operation Council, Malaysia, Indonesia and Turkey.