By Bernardo Vizcaino
LONDON, Oct 31 (Reuters) - The central banks of Malaysia and the United Arab Emirates are working on a fund passporting mechanism that would facilitate sales of funds from one country into the other, Malaysia's central bank governor said.
The plan is part of a bilateral agreement signed earlier this month between the central banks of the two countries, aimed at building closer economic ties with a focus on Islamic finance.
"It involves a bilateral agreement between countries and guidelines to facilitate the inception of this, what you call a passporting mechanism, that are accepted by both parties," Zeti Akhtar Aziz said during a panel discussion at the World Islamic Economic Forum in London.
This could help fund managers raise assets under management by tapping into a wider client pool, and provide a more geographically 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 sector globally, according to data from Lipper, a Thomson Reuters service.
There have traditionally been substantial differences between the Gulf and southeast Asia in the design and use of sharia-compliant financial products, but the plan for the passporting mechanism is a fresh sign of pressure for convergence.
Last year, Malaysia's securities commission revised its guidelines for screening equities that qualify for Islamic investment, moving them closer to those used in the Gulf.
The Malaysian commission also signed an agreement earlier this month with regulators in Singapore and Thailand to encourage cross-border offers of investment funds. (Editing by Andrew Torchia)