Both bodies signed a memorandum of understanding on Tuesday to work
together in developing financial products in banking and investment,
which are compliant with Islamic religious law, known as Sharia,
according to a press release issued by HKMA and DIFC.

The two financial authorities will cooperate in finding ways to
promote Islamic financial activities on a cross-border scale, such as
trading in sukuk, which is a type of Sharia-compliant bonds.

Sharia-complaint finance firms do not collect interest on
investments and are not involved in short-selling stocks and investing
in companies that promote gambling, pornography or alcohol, all
prohibited by Islam.

"The Memorandum of understanding gives us an opportunity to enhance
cooperation between our financial infrastructures, in particular the
payment systems of the two regions," Nasser al-Shaali, the DIFC Chief
Executive Officer said.

The Islamic finance market has been rapidly growing since its
inception over 30 years ago.

Islamic financial institutions hold assets estimated at over 300
billion dollars with another 400 billion dollars in financial
investments, according to a 2006 study by the US-based accounting firm
KPMG.

The study found that Islamic finance is growing at a rate of about
15% a year.

Financial experts predict growth of at least 20% in the
Islamic finance sector in the next five years.

The DIFC is home to over 600 firms, including leading international
financial services firms and banks.

- Sapa