By Bernardo Vizcaino
LONDON, Oct 31 (Reuters) - The central banks of Malaysia andthe United Arab Emirates are working on a fund passportingmechanism that would facilitate sales of funds from one countryinto the other, Malaysia's central bank governor said.
The plan is part of a bilateral agreement signed earlierthis month between the central banks of the two countries, aimedat building closer economic ties with a focus on Islamicfinance.
"It involves a bilateral agreement between countries andguidelines to facilitate the inception of this, what you call apassporting mechanism, that are accepted by both parties," ZetiAkhtar Aziz said during a panel discussion at the World IslamicEconomic Forum in London.
This could help fund managers raise assets under managementby tapping into a wider client pool, and provide a moregeographically diverse range of products to investors.
The two countries have a total of over 270 Islamic funds,representing close to a third of the entire Islamic funds sectorglobally, according to data from Lipper, a Thomson Reutersservice.
There have traditionally been substantial differencesbetween the Gulf and southeast Asia in the design and use ofsharia-compliant financial products, but the plan for thepassporting mechanism is a fresh sign of pressure forconvergence.
Last year, Malaysia's securities commission revised itsguidelines for screening equities that qualify for Islamicinvestment, moving them closer to those used in the Gulf.
The Malaysian commission also signed an agreement earlierthis month with regulators in Singapore and Thailand toencourage cross-border offers of investment funds. (Editing by Andrew Torchia)
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