It will also promote the development and market acceptance of IIFM. In the LFX, dual listing and trading of capital market instruments are being undertaken, for both Islamic and conventional papers. This includes equities, debt instruments, bonds (sukuks), asset back securities and mutual funds. In addition, the Islamic capital market will be expanded through IIFM and strategic alliances with other stock exchanges. These offshore activities will thus complement the onshore activities. Not only has attention to be given to the financial infrastructure, the financial markets and to institutional development, but also to the regulatory, Shariah and legal dimension. The hallmark of a well-developed financial infrastructure is an effective legal, regulatory and supervisory framework which underpins the stability of the financial system. For the Islamic financial system, this framework also needs to be consistent with the requirements of the Shariah. It is also recognised that good corporate governance reinforces sound regulation and supervision. This contributes towards maintaining market confidence, and strengthening transparency and accountability that is implicit in Islamic finance. Its emphasis is value-oriented and to promote fairness and justice with respect to all stakeholders of the financial institution. Transparency and disclosure is essential to this process. While the comprehensive and timely availability of financial information will increase market discipline, it also needs to be complemented with the ability of the market players to analyse, and appropriately interpret the information. Closely related to this issue is the need to strengthen the framework for consumer protection to provide an avenue for redress in the event of disputes.

In this regard, the IFSB has already made progress in developing the prudential standards on the capital adequacy and risk management framework, and has commenced work on developing standards on corporate governance. Appropriate accounting standards have also been put in place to reflect the true and fair value of banking operations that would lead to greater accountability and responsibility on the part of financial institutions. While the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has made a significant contribution in formulating and issuing accounting and auditing standards for Islamic financial institutions, efforts need to be intensified to promote of the adoption of these standards. The International Islamic Financial Market (IIFM) further provides the environment that will encourage active participation by both Islamic and non-Islamic financial institutions in the secondary market for Islamic financial instruments. Several global sovereign sukuks have been issued in the international market that has attracted wide interest, both by Muslim and non-Muslim investors. The next phase in this development is the raising of funds from this market by multinational corporations and multilateral institutions. As the volume increases, it would strengthen the inter-linkages and integration amongst the Islamic financial centres. In addition to structuring a variety of attractive off-the-shelf instruments, efforts need to be intensified to create a benchmark curve for future issues. With a well-developed system, the trading of instruments would encourage the free flow of capital movements and would in turn facilitate greater Islamic fund management activities.