Wethaq Capital Markets is gearing up to arrange the pilot digital Sukuk issuance coming out of Saudi Arabia using its distributed ledger technology (DLT) by the fourth quarter of 2020.
This follows the recent FinTech ExPermit (financial technology experimental permit) Wethaq received from the Saudi Capital Market Authority to start offering securities to investors using the Wethaq platform, which supports the issuance, administration and distribution of Sukuk.
The Wethaq platform is offered as an alternative to the currently ‘silo-ed’ and private processes of the Islamic capital markets.
“The strong trend of ‘platformization’ that originated in big tech is now being increasingly adopted in finance too, and in our view, is the appropriate model with its open economics and operations: the market participants and their service providers interact on a single platform operated by an ecosystem orchestrator and enhanced by third-party applications,” Mohammed Alsehli, CEO of Wethaq, explains.
While the market is in dire need of innovation especially with the impact of the coronavirus pandemic on the global financial landscape, some reservations are expected as there is currently no single platform available that offers primary issuance, servicing and trading all in one.
Mohammed says the reservations are typical with regards to a growing company with an ambitious plan to modernize the Islamic market infrastructure. “We find these reasonable and will seek to address them through constructive dialogue and the achievement of significant milestones.”
The company also draws from its collaborations with regulators in the UAE and Malaysia as well as other entities in global markets that regard them as a gateway to the Islamic market.
Mohammed adds: “Myself being Saudi and heavily involved in fintech and banking initiatives in the Kingdom over the years, I feel that both the market and the authorities welcome credible innovation which is homegrown and has potential to modernize market infrastructure locally and beyond.”
The UAE-based company plans to connect to trading platforms and EU-domiciled exchanges by the end of 2020, and officially entering the Malaysian market and launching a technical advisory and trading venue in 2021. In 2019, Wethaqissued a pilotSukuk facility under the supervision of the Dubai Financial Services Authority, automating all the processes within the lifecycle of a Sukuk facility using one platform.