The International Islamic Financial Market and the International Swaps and Derivatives Association (ISDA) have outlined the Tahawwut Master Agreement, which falls into line with existing sharia-compliant practices and has been approved by the region's eminent sharia scholars. The agreement is similar to existing documentation drafted by ISDA in 1992 for derivative use in Western markets. The document is comparable to the agreement between Bank Islam and Bank Muamalat in Malaysia - which has a much more developed Islamic finance market - but was not put into practice in the Middle East as sharia standards in Asia are often seen as too lax for Middle Eastern scholars.
Islamic investors are currently able to copy the effects of conventional derivatives by using a complex combination of unilateral promises and 'sale and deferred payment' structures such as murabaha. But Islamic derivatives have remained an undeveloped financial product in the Middle East, as each bank often uses its own composition and documentation, which increases complexity and cost.
