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Update 1 islamic finance group approves standard for gold products

(Updates with comments)By Bernardo VizcainoNov 28 The Bahrain-based group that issues guidelines generally followed by Islamic financial institutions has approved a sharia standard for gold-based products in a bid to expand the use of bullion in Islamic finance. Traditionally, gold has been viewed as a currency in Islamic finance, confining it to spot trades in fixed weights and measures. Investors have been unable to speculate on its future value and there has been no clear policy on how to trade gold. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) approved the final version of its new standard on gold and trading controls last week and an official launch will be announced soon, it said in a statement. The new standard addresses issues such as collateral, set-off, screening and the exchange of gold in spot and deferred transactions. Sharia compliant products backed by gold could include exchange-traded funds and savings accounts.

AAOIFI issues guidelines that are followed wholly or in part by Islamic financial institutions across the world, so its efforts would help align the industry to global practices. Uncertainty about how gold can be used in Islamic finance has kept sharia-compliant bullion transactions at a minimum, Matthew Keen, founder of Dubai-based precious metals consultancy Evidens and an adviser to the World Gold Council, said. London-based ETF Securities, for example, launched a sharia-compliant exchange-traded commodity product for gold, silver, platinum and palladium in 2008 but it never gained traction.

"There is such a lack of understanding of what sharia law would mean in terms of gold investing and this standard would at least provide a common ground," ETF Securities director of commodity research Nitesh Shah said."However, this is not going to be a game changer for global gold consumption," he said, as sharia law does not prohibit the ownership of gold jewellery or coins.

The final standard will be made available on a complimentary basis by AAOIFI and the World Gold Council ; var median = (relatedItemsTotal / 2); var $relatedContentGroupOne = $(' ul'); var $relatedContentGroupTwo = $(' ul'); $.each($relatedItems, function(k,v) { if (k + 1 = median) { $relatedContentGroupOne.append($relatedItems[k]); } else { $relatedContentGroupTwo.append($relatedItems[k]); } }); } else { $('.third-article-divide').append($('div class="related-content group-one"h3 class="related-content-title"Also In Basic Materials/h3ul/ul/div')); $('.related-content ul').append($relatedItems); } },500); } Next In Basic Materials Zambia Vedanta mine workers strike over delayed pay talks -union LUSAKA, Jan 4 Zambian workers have downed tools at a mine and copper processing plant belonging to Konkola Copper Mines (KCM), a unit of Vedanta Resources, in a dispute over the pace of wage talks, a union official said on Wednesday. Alcoa to close Suralco refinery in Suriname Jan 3 Alcoa Corp said it would permanently close its Suralco alumina refinery and bauxite mines in Suriname, more than a year after stopping production at the plant. UPDATE 1-ETFs globally gather record cash in 2016 -BlackRock NEW YORK, Jan 3 Investors funneled $375 billion into exchange-traded funds in 2016, investment manager BlackRock Inc said on Tuesday, a global record that came as investors looked to cut costs. MORE FROM REUTERS window._taboola = window._taboola || []; _taboola.push({ mode: 'organic-thumbnails-a', container: 'taboola-recirc', placement: 'Below Article Thumbnails - Organic', target_type: 'mix' }); Sponsored Content @media(max-this site) { #mod-bizdev-dianomi{ height: 320px; } } From Around the Web Promoted by Taboola window._taboola = window._taboola || []; _taboola.push( { mode: 'thumbnails-3X2', container: 'taboola-below-article-thumbnails', placement: 'Below Article Thumbnails', target_type: 'mix' } ); window._taboola = window._taboola || []; _taboola.push

Update 1 obama to back mortgage finance reform to speed housing recovery

Aug 5 President Barack Obama will propose overhauling the U.S. mortgage finance system in a speech on Tuesday, weighing in on a tangled and polarizing problem that was central to the devastating financial crisis in 2007-2009 and that continues to slow the economic recovery, the White House said. Obama will propose eliminating mortgage finance entities Fannie Mae and Freddie Mac over time, replacing them with a system in which the private market buys home loans from lenders and repackages them as securities for investors, senior administration officials said. The mortgage securitization process is deemed essential to the smooth flow of capital to housing markets and the availability of credit. The government's role would be relegated to providing some form of insurance or guarantee, and to providing oversight, according to officials and a White House statement. Fannie Mae and Freddie Mac, originally chartered by Congress to expand mortgage finance, were taken over by the government in 2008 amid mounting losses in the financial crisis. Propping them up cost taxpayers $187.5 billion, although the firms have now returned to profitability."We have to end Fannie and Freddie going forward and replace them with a commitment to the notion that private capital must be wiped out before the government pays on any form of catastrophic guarantee or reinsurance," a senior administration official told reporters. The departments of Treasury and Housing and Urban Development have been working on an outline for housing finance reform. They outlined several options in a white paper to Congress in 2011. After plunges in home values that wiped out an estimated $7 trillion in homeowner equity and wrecked many Americans' finances, housing markets are staging a modest recovery. Obama, as part of a series of speeches pushing for steps to boost tepid economic growth, is focusing on housing issues in a speech in Phoenix, Arizona, in one of the regions hardest hit by the housing bust.

The president generally agrees with the bipartisan Senate proposal that would replace Fannie and Freddie with a system that would allow private firms to securitize mortgages, a senior administration official told reporters in a conference call. A government reinsurer of mortgage securities could backstop private capital in a crisis, the official said. Obama would want the Senate measure to go farther in helping first-time home buyers and in making sure affordable rental housing is available, the official added. The Senate bill, though, remains at odds with the bill advancing in the Republican-controlled House of Representatives that would liquidate Fannie Mae and Freddie Mac over five years and limit government loan guarantees.

RESTRUCTURING MORTGAGE SYSTEM TO TAKE YEARS Fannie Mae and Freddie Mac became dominant players in housing finance when private lending to home-buyers declined after the financial crisis. The government-backed companies own or guarantee more than half of all U.S. home loans and are critical to keeping capital flowing to lenders and borrowers. Restructuring of the $11 trillion mortgage finance system is expected to take years. Any overhaul must also include a mechanism to maintain stability for the 30-year-fixed rate mortgage even in shaky financial markets, the official said.

Mortgage finance reform should also incorporate a fee on mortgage products to be paid by financial firms that would help fund for lower-income families buy homes, the official added. Analysts say more robust housing activity is being held back by tight credit. Clearing up questions about the future of Fannie Mae and Freddie Mac could help unlock capital for mortgage finance and give housing activity a boost."On Capitol Hill, the odds are against short-term legislation," said Jaret Seiberg, a senior policy analyst at Guggenheim Securities. "Longer-term housing finance reform is gaining momentum. The leading ideas would reduce the government involvement in housing finance, which would mean higher rates for consumers."The administration is also reinvigorating its effort to help underwater borrowers by pushing for an expansion of refinancing for those who purchased homes when rates were above the current historic lows, the White House said. By refinancing, borrowers could save hundreds of dollars a month, adding to their disposable income and stimulating the economy, officials said. So far, legislative efforts to expand refinancing programs have failed in Congress. Obama's nominee to oversee Fannie Mae and Freddie Mac, veteran Democrat Representative Mel Watt, has failed to garner enough support for confirmation in the full Senate. Administration officials are also urging lawmakers to bring Watt's nomination to the Senate floor as part of broader efforts to overhaul the overhaul nation's decades-old housing financial system.