A proposed rule change could reshape the global sukuk market as regulators, scholars and issuers debate whether stricter asset ownership requirements will strengthen Shariah authenticity or hinder liquidity and issuance.
The discussion focuses on AAOIFI Standard 62, which aims to clarify what constitutes real asset backing in Sukuk structures. Recent coverage by the Financial Times has highlighted growing divisions within the industry, with some market participants warning that strict interpretations could reduce flexibility, while others argue that it is necessary to strengthen credibility in Islamic capital markets.
This debate comes at a time when Islamic finance is no longer a distinct segment. Sukuk issuance has continued to expand in the Middle East and Southeast Asia and is increasingly being distributed through global banking channels. As the quantity increases, the investigation has intensified. Investors, regulators and Shariah scholars are paying increasing attention to whether Sukuk structures reflect the true economic substance or rely too heavily on legal form.
Industry observers increasingly agree that the real challenge is not whether standards should evolve, but how they can do so without undermining market depth or cross-border operability. Sukuk today are issued by sovereigns and corporates, settled through international banking infrastructure and managed in jurisdictions with very different regulatory and cultural frameworks. This is where theory meets execution.
That operational dimension is the focus of the analysis of Prospero Pica, founder of ABP Partners, a Swiss-based firm specializing in complex banking execution. With over twenty years of experience providing cross border banking and treasury programs in Europe, the United Kingdom, Southeast Asia and the Middle East, Prospero Pica views Islamic finance primarily as an execution discipline rather than a product category.
According to Prospero Pica, the debate surrounding AAOIFI Standard 62 highlights a structural reality. Sharia compliance does not reside only in documentation or legal opinions. It is tested daily in how assets are controlled, how cash flows move through the treasury system, how data is handled and how institutions respond under operational stress. When standards tighten, those layers of performance become visible.
This change has a direct impact on the banking infrastructure. Stronger requirements around asset ownership and risk allocation demand traceability across core banking systems, treasury platforms and reporting frameworks. For institutions operating internationally, this is particularly complex. Compliance must be demonstrable across borders and auditable within different supervisory regimes.
In this context, Switzerland has quietly strengthened its role as a neutral execution center for Islamic finance. Not as a retail market for Sukuk, but as a trusted environment where governance, program management and cross-border banking execution can be promoted. Swiss-based structures are often used to coordinate international flows, ensure transparency, and support audit readiness, all elements that become important as standards evolve.
ABP Partners operates in this area, focusing on execution rather than origination. Its work reflects the principle on which Prospero Pica often emphasizes. “Technology should follow the bank, not replace it. At the heart of the transformation is the banking DNA.” In the context of the Standards 62 debate, this philosophy translates into a practical message. Strong regulations will only be successful if institutions have the operational maturity to support them.
As Islamic finance grows globally, the discussion around Sukuk standards is likely to intensify. This ultimately highlights that the future of the market will be shaped not only by scholarly interpretation, but also by the ability of banks and institutions to execute compliance finance across borders. In that transformation, expertise based on actual banking execution rather than abstract design is becoming increasingly central.