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Sharia contravention

A new sharia-compliant structure that employs a total return swap has drawn strong criticism from structurers and scholars alike. Critics say the product circumvents the spirit of sharia and may spell the end of Islamic finance. By Matt Cameron

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The Islamic financing industry has become embroiled in a fierce debate over an innovative type of sharia-compliant structure that has been used as an underlying for product issuance. The structure allows investors to access returns from assets that are prohibited under sharia law by using a total return swap (TRS) in the form of an Islamic contract called a Wa'd (promise), so that the final return

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