Following the initial approval received from the Regulations Lab within the UAE government under the supervision of the Securities and Commodities Authority (SCA), ADIB is now among the first banks in the region to test the fractional Sukuk technology in a safe environment. Through this, the financial institution focused on scaling the accessibility of Sukuk investing for retail customers. In addition, the move solidifies the UAE’s position as a global hub for technological advancement and financial services.
At the time of the announcement, to access the Sukuk market, companies were required to invest a minimum of USD 200,000. Yet, with fractional Sukuks and considering the initial approval provided to ADIB, retail investors can invest as much as USD 1,000, which delivers them access to the benefits of fixed-income financial services and products. This is set to offer a new investment opportunity for customers, enabling them to invest in an additional asset class with smaller amounts offerings.
Moreover, the collaboration intends to provide a suite of flexible laws and regulations to conduct tests on fractional Sukuk, which in turn can ensure scaled levels of safety and risk mitigation in implementing new technologies and preventing complexities that come with experimental phases. Also, the move focuses on fostering a secure environment for technological advancement and accelerating the expansion and market obtainability of fractional Sukuks. As part of the agreement, a legislative work system is set to be developed to test the fractional Sukuk technology that digitally separates a Sukuk into small segments and enables individual investors to pool their funds into acquiring fractional shares of usually costly corporate Sukuks without spending substantial capital.
The announcement comes after ADIB partnered with Silent Eight to automate its alert screening investigation process and optimise its capabilities. The collaboration intended to allow ADIB to automate the alert screening investigation process to scale the accuracy of its compliance operations. Implementing the platform was set to enable the bank to reduce the volume of false positive alerts without human intervention.
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