The launch of Thomson Reuters's supposedly "next generation Islamic Finance Gateway to guide the emerging industry to the next stage of growth and development" comes at a time when the industry is taking stock in the aftermath of the worst global financial crisis since the 1930s.
Perhaps Thomson Reuters can be forgiven for the hype of its indulgence in self-importance and its savvy use of language, after all, the Gateway was launched simultaneously in Abu Dhabi and Dubai, the capital of the Middle Eastern version of "bling-bling".
As usual there was no difficulty in finding the CEO endorsements of the Gateway even before the product has been tried and tested in a market notorious for its fickleness, under-developed culture of banking transparency, poor data collection and research.
The launch coincided with a string of summits on Islamic banking and finance held simultaneously (so it seemed) in Dubai, Manama, London, Geneva, Kuala Lumpur and Jakarta. "Next generation" also implies that Thomson Reuters had a previous version of the Gateway, and perhaps not surprisingly some Islamic bankers who have had a preview of the Gateway are bemused exactly how it will guide a disparate global industry to its next phase of development, albeit of course at a handsome subscription fee.
For Reuters, this is a departure from its tried and tested and staid soberness of yesteryear.
There have been several attempts at launching a number of information and data platforms targeted at the growing Islamic finance sector. HIPIF (the Harvard-based Islamic information platform), Islam-IQ and I-Hilal came, saw and failed to conquer the market. They were launched by those who were neither information nor data specialists, and as such failed to capitalize an opportunity in a market which is still screaming for quality, informed, objective, independent and up-to-date information, data and analysis.
For the man behind the Islamic Finance Gateway, Rushdi Siddiqui, global head of Islamic Finance at Thomson Reuters, this may turn out to be a much tougher task than his previous calling as the director of Islamic Indexes at Dow Jones Indexes, where he launched the Dow Jones Islamic Market (DJIM) family of Shariah-compliant indices.
True to form, Siddiqui did not disappoint. He emphasized in "Rushdi-speak" at the launch that "despite its image as an emerging industry, Islamic finance has now grown to be worth around $1 trillion and the Thomson Reuters Islamic Finance Gateway truly opens up this world of possibilities and opportunities for financial market participants and professionals. The conventional, Western finance industry is accustomed to clean, crisp, robust information, real-time news, connectivity to communities and the ability to act and transact with trusted counterparties. By providing these "must have" features the Thomson Reuters Islamic Finance Gateway demonstrates the industry's true breadth and makes the transition for all to Islamic finance a seamless one."
The Islamic finance industry coped and developed over the last three decades without the support of Reuters, APs, Dow Jones and the Bloombergs of this world. Indeed, it will continue to do so for the next three decades. The international media still today cover Islamic finance with a hint of stereotype and cynicism especially when it suits their agendas. Had it not been for the notable involvement of the global banking majors in Islamic finance, and the industry's phenomenal growth over the last decade or so, this coverage would have been confined to post-9/11 issues such as terrorism financing, money laundering and so on.
Quality, independent, real time information is the backbone of the conventional financial system, which has had a 150-year plus head start on the contemporary Islamic finance industry. Islamic finance, being a faith-based system of financial management, differs in its fundamental ethos to that of the conventional system. They are in reality diametrically-opposed. Yes, there are some similarities and some overlapping. But any Gateway or platform that purports to give comparisons should be careful that they are like-for-like. This is very difficult given the specificities of Islamic banking and finance and the fact that next generation of Islamic bankers are more interested in developing Shariah-based financial products as opposed to Shariah-compliant ones. This they argue is the true calling of Islamic finance - to develop real and sustainable products as true alternatives to conventional ones.
The growth of Islamic finance has also seen opportunities for financial information and data providers such as Moody's Investors Service, Standard & Poor's, Fitch Ratings and Capital Intelligence. The Thomson Reuters Islamic Finance Gateway is no exception in this respect. There is also no prospect (at least in the short-to-medium-term) for any generic competitor from OIC countries or from the South.
The involvement of Bloomberg, Micropal, Dow Jones, Thompson Reuters etc. in the Islamic finance space should be welcomed. Some of them have already contributed to the development of the Islamic finance market. But their involvement and contribution must be gauged rigorously like any other products and services, both in terms of quality and content, and whether they are merely fair-weather friends.
The Gateway is available on Thomson Reuters 3000 Xtra desktop. Some of the claims made for the Gateway may yet come to haunt Thomson Reuters. "The rich data and breaking news is complemented by a global rolling tickertape of Islamic and conventional indexes, multi-currency real time inter-bank conventional versus Islamic inter-bank rates, an information fund supermarket and click-through links to Gateways for the Organization of Islamic Conference, Gulf Cooperation Council, Association of Southeast Asian Nations and G20 countries," stresses Thomson Reuters.
Comparisons of conventional versus Islamic indexes and inter-bank rates are meaningless. The stock selection and criteria are intrinsically different. At best they can be used merely to compare pricing and the movements of certain industry sectors. And there are hardly any developed Islamic inter-bank markets other than the one in Malaysia. Similarly links to the OIC and GCC Gateways once again are meaningless given the paucity of the platforms in terms of updated news, lack of objectivity, blatant promotion and omission of politically and financially sensitive issues.
The Thomson Reuters Islamic Finance Gateway is light on detailed hardcore information and analysis. Relying on Reuters' existing news coverage on Islamic finance would not suffice, because the coverage is wanting both in substance and form. It would be better for Reuters to spend extra resources in training and sharpening the knowledge base of their reporters and analysts on Islamic finance.
Also, as one Islamic banker stressed, "Why would I want to go to the Reuters Gateway if I want to access an S&P report on Islamic finance. I would go directly to S&P." Surely, in the light of the role rating agencies played in the subprime debacle, it would be true to Reuters to scrutinize and analyze the S&P, Moody's and Fitch reports on Islamic finance and see whether they do meet the standards required of them.
The irony may be that the Thomson Reuters Islamic Finance Gateway may be too far ahead of its time for an industry that is nascent, evolving, beleaguered with bottlenecks, and in general can't even manage and maintain their existing websites to acceptable good practice standards.
Link: http://arabnews.com/economy/islamicfinance/article24126.ece
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