The Dubai Financial Market has finalised comprehensive standards to be established for the issuance of sukuk, or Shariah-compliant debt, said a top Islamic scholar.

The standards are ready and will be announced within two weeks after they are approved by the authorities, Dr Hussain Hamid Hassan, Chairman of the Shariah board of the Dubai Financial Market (DFM), the first and the only Shariah-compliant stock market in the world, told Emirates Business.

The principles will not only cover the issuance of sukuk but will address the areas relating to listing, trading on secondary markets and market making for these instruments. The establishment of standards is expected to help create a vibrant retail market for sukuk in this part of the world.

So far, the majority of subscriptions to sukuk have come from institutions in the West. "This has to change and more retail participation needs to come to the sukuk industry," said an expert on Islamic finance.

Dr Hussain, who heads various Shariah boards including that of Dubai Islamic Bank, the largest Islamic bank in the country, said: "The establishment of standards will take the UAE's sukuk industry far forward as this is one aspect that has been widely sought by the industry."

The absence of standardisation has often been cited by critics of Islamic finance, and the industry has so far shrugged off these comments saying Islamic finance is still in its infancy. According to Dr Hussain, who holds a doctorate in Shariah from Al Azhar University, Egypt, the sukuk industry has slowed down since the financial crisis gripped the world, but expressed hope that it would recover during the second half of this year. At least $5 billion to $6bn worth of sukuk is in the pipeline for that period.

Industry leaders from Malaysia have said the sukuk industry is more advanced in that country compared to other regions as there are government-imposed regulations and guarantees to support sukuk issuance. Even rating of issuers has been viewed as an important component when it comes to sukuk issue in Malaysia, they say.