1. SWIFT & Islamic Finance John Falk 12 th AMEDA Meeting, Libya - 30 Nov 2010

2. What is it? Banking consistent with the principles of Islamic law (Sharia) –Interest, or Riba, is prohibited –Investment in companies providing goods or services contrary to Sharia principles is forbidden (e.g. banks, alcohol, casinos, etc.) –Emphasis on moral and ethical values in all dealings Islamic banks operate in the same manner and marketplace as conventional banks It is NOT a competing ‘ism’ “Islamic Finance is not a competing ‘ism’, but simply finance subject to another regulatory authority.” – Shaykh Yusuf DeLorenzo, Sibos 2009 “The most common forms of investment for Muslim’s are equities, mutual funds and property. Surveys show that between 3,000 and 4,000 companies listed on exchanges…are acceptable by Islam. Investments in such assets by Muslim investors are made in the same manner as by Western investors.” – A Muslim’s Guide to Investing & Personal Finance SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010 Islamic Finance “Islamic finance is here to stay. Those who are not involved should get involved.” Asif Raza, Managing Director, MENA, J.P. Morgan Sibos 2010

3. Market Size and Growth Islamic finance growth is attributed to strong growth in the GCC countries, emerging markets and economies of Asia, coupled with a rapidly growing population –Muslim’s are increasingly seeking Sharia compliant banking solutions –Non-Muslim’s are turning to Islamic banking as a form of ‘ethical banking’ –Non-Islamic banks are opening Islamic Windows SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010 Sharia Compliant Assets (USD Billions) 200620082009 503.1822.1 1,000 (estimate) 15 – 20% since 1975 63% 22% Forecasts suggest 2009 value could double by 2015 Source: The Banker magazine

4. Global Muslim Population and Growth Country / Region Muslim Population 2009 Muslim % of Total Population 2009 Asia-Pacific972 million24.1% Middle East / North Africa 315 million91.2% Sub-Saharan Africa240 million30.1% Europe38 million5.2% Americas (North / South) 4.5 million0.5% World Total1.6 billion22.9% SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010 Source: October 2009 study by the Pew Research Center report of Mapping the Global Muslim Population 2006 Population Growth Rates Muslim population:1.8% Global population:1.1%

5. SWIFT’s Islamic Finance Vision & Strategy SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010 Vision To cater to unique Islamic transactions in Islamic and Conventional banks, as well as conventional transactions within Islamic banks. WhoIslamic banks + Conventional banks offering Islamic products What SWIFT can support the Islamic financial market in two ways: Provide conventional banking services to Islamic banks Develop new services catering to unique Islamic financial transactions When Ongoing: Business as usual for conventional banking services Murabaha message promotion Exploration of further Islamic message requirements (MT3xx) underway WhereMiddle East and Malaysia (90% of market) How Community engagement: Business as usual Account Management Industry association engagement: AAOIFI, SCM and AIBIM Sharia compliance endorsement from AAOIFI Promote at Sibos, Regional Conferences, Industry Conferences

6. Today 240 Islamic banks on SWIFT –84% of Sharia assets –44 million messages in 2009 Use SWIFT for: –Payments –Foreign Exchange –Securities –Funds –Trade Finance –Cash Management Tomorrow Re-use ISO standards to include Islamic products First is Murabaha –Commodity based money market deposit –60% of all Islamic financing –Cat 5 messages with Rulebook “Interest” in some messages is an issue – exploring solutions Need for Islamic derivatives message standard SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010 SWIFT & Islamic Finance SWIFT and Islamic Finance is not new. We are simply building on the existing relationship, to bring standardisation and automation to Islamic financial products.

7. Murabaha Flow Example Notice of Sale (MT 515) Seller’s Acceptance (MT 515) Customer Money Transfer (MT 202) Purchase Request (MT 502) BankBroker BBroker A Seller’s Offer (MT 502) Purchase Acceptance (MT 515) Sale Acceptance (MT 509) Notice of Intent (MT 502) Purchase Acceptance (MT 509) Form of Offer (MT 515) Seller’s Request (MT 502) Purchaser Offer (MT 502) Deferred Money Transfer (MT 202) Master Agreement SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010

8. AAOIFI Certificate – SWIFT Murabaha

9. Going Forward Murabaha Rulebook available – download from www.swift.com/IslamicFinancewww.swift.com/IslamicFinance AAOIFI approved Promote amongst Islamic users Working with Partners to ensure automation (SWIFTReady Label for 2011) New Areas Define requirements for: –FX, Money Market Deposit, Derivatives confirmations (Cat 3) –Corporate Actions, Sukuk settlement messaging (Cat 5) Will obtain AAOIFI Sharia endorsement for each new initiative Community Engagement One to one engagement with Islamic users AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) Conferences: Engage industry via attendance / speaking at Islamic Finance conferences Establish an IMPG (Islamic Market Practice Group)? –Is there interest from AMEDA members? SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010

10. Thank you John Falk Director, Securities Market Infrastructures SWIFT Avenue Adele 1 B-1310 La Hulpe Belgium +32 2 655 31 11 +32 2 655 34 61 +32 2 655 37 52 +44 777 15 12 952 john.falk@swift.com www.swift.com T D F M W E SWIFT & Islamic Finance : 12th Ameda Meeting, Libya 30 Nov 2010