INTERNATIONAL. Dubai Gold Securities (DGS), the  gold tradeable security launched earlier this month iand trading on Nasdaq Dubai, has been advised by Shariah Capital on issues of islamic finance compliance.

Shariah Capital is a US-based company that creates and customizes Shariah compliant financial products and platforms and provides selective Shariah consulting and advisory services primarily to global financial institutions and investment firms with product initiatives directed to Islamic investors, according to the company's website.

Under the direction of Sheikh Yusuf Talal DeLorenzo, Chief Shariah Officer of Shariah Capital and Executive Representative of the DGS Shariah Supervisory Board, Shariah Capital and the Shariah Supervisory Board scholars oversee the operations, methodologies and contracts related to DGS.

Shariah Capital's ongoing role is one of monitoring and maintenance, coordinating the scholars' unannounced reviews and their detailed annual examinations that are reported to investors as an annual re-certification of Shariah compliance.

"The Shariah scholars enlisted by Shariah Capital for the DGS Shariah Supervisory board likewise were pleased at the product's positive reception and the fact that this security represented a first for Islamic finance. Each DGS certificate, traded on NASDAQ Dubai, represents 1/10th of one ounce of allocated gold at independent custodian HSBC in London. The publicly-traded certificate can be redeemed for physical gold by an investor at any time, a first for Islamic investors,"  a statement issued by Shariah Capital said.

"In strict observance of Shariah and the industry standards developed for Shariah compliance by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), they together periodically check and re-certify compliance of both trading activities and the allocation of gold bullion backstopping the certificates, the latter involving personal inspections of the custodian's vault facility", the statement added.

Dubai Gold Securities is a Nasdaq Dubai-traded product that offers a simple, secure and sharia-compliant way to trade in gold bullion, the invitation said. It would comply with Islamic investment principles and offer regional investors a way to diversify into gold without actually buying the metal.

The World gold Council (WGC) sponsors a number of gold-backed exchange traded funds (ETF) worldwide, including DGS, accounting for about 85% of the market. ETFs are listed and traded like equities, giving investors exposure to the gold market without taking physical delivery. Sponsors buy the gold and store it.

Dubai has a long-established market for gold bullion and jewellery fuelled by strong demand from the Arab world and India.

Dubai also hosts gold futures trading at the Dubai Gold and Commodities Exchange (DGCX). The state-run DMCC holds a majority stake in the DGCX.

According to the WGC, several Middle East nations including Dubai are going to be action centres for gold investments.

“We feel Middle East nations are going to witness lots of investments in gold sectors. Several global companies including gold mining processing and production companies are looking at Middle East for major investments,” says Lama Al Saheb, head of marketing WGC head of marketing in Middle East.

"DGS is a remarkably unique offering and a notable achievement for the growing Islamic finance industry. We know of no other product, Shariah compliant or conventional, that has taken steps like DGS that insure its certificates exactly and precisely represent allocated gold for the investor. Nor is there a gold product like DGS that offers investors a choice of physical delivery. Finally, there is no offering that includes the global reach of the DGS Shariah Supervisory Board scholars, four of whom are members of the AAOIFI Shariah Board. Shariah Capital is privileged for the opportunity to work with the DMCC and the WGC in the development of this robust ETF product," the Shariah Capital statement concluded.

Shariah Capital is publicly traded on the Alternative Investment Market (AIM) of the London Stock Exchange.  It reports to the Financial Services Authority (FSA) in the UK. and is registered and licensed by the Dubai International Financial Centre (DIFC) in Dubai. The company is incorporated and headquartered in the United States.  Its regional office operates from Dubai.

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