Fusang Exchange, a digital stock exchange operator regulated and supervised by the Labuan Financial Services Authority in Malaysia, has tokenised and listed a digital sukuk. The digital token represents the corresponding underlying sukuk issued by the International Islamic Liquidity Management Corporation (IILM). IILM is an international organisation established to address liquidity management challenges faced by Islamic financial institutions, and acts as the programme administrator of the underlying sukuk. Its membership comprises central banks of Indonesia, Kuwait, Malaysia, Mauritius, Nigeria, Qatar, Türkiye, the United Arab Emirates as well as the Islamic Corporation for the Development of Private Sector (ICD). The tokenisation and listing exercise was completely led by Fusang, utilising its proprietary Fusang Depository Receipt (FDR) structure to ‘wrap the underlying sukuk contract into a digital form. The FDR is designed to retain full transparency and certainty of investors’ legal rights and to adhere to Shariah standards set by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). ZICO Shariah Advisory Services acted as the Shariah adviser for the issuance of these ERC-20 compliant tokens, an Ethereum standard for token issuance. Like American Depository Receipts (ADRs) and Hong Kong Depository Receipts (HDRs), FDRs are intended to represent a beneficial interest in an underlying security, which can then be listed, traded, and settled on Fusang Exchange. FDRs are reported to be fully redeemable for the underlying IILM sukuk and are secured by third-party independent custodians. FDRs are also intended to ensure all parties have uniform legal rights and custodial arrangements. Henry Chong, CEO of Fusang Exchange, said, “Fusang’s next-generation tokenisation technology and standardised legal framework has created the world’s first truly global digital stock exchange. Our institutional-only digital infrastructure is built to serve, not disrupt, traditional financial intermediaries by enabling trading, custody and clearing of tokenised assets through a fully-regulated ecosystem.” Chong added that Fusang is encouraged by the Malaysian Government’s commitment to developing the Islamic financial market, as evidenced by announcements in the Malaysian Budget 2024 – which he says align with Fusang’s aim to revolutionise Islamic financial markets via digital initiatives.
©Markets Media Europe 2023
