Abu Dhabi Islamic Bank (ADIB) is taking significant strides to democratize sukuk investing by successfully testing fractional sukuk technology within a controlled environment. This move is set to make Sharia-compliant financial products more accessible to retail investors, dramatically lowering the entry threshold from $200,000 to just $1,000.
The sukuk market, characterized by bond-like instruments aligned with Islamic finance principles, has historically been limited to institutional or high-net-worth investors due to its high minimum investment requirement. ADIB’s groundbreaking initiative is positioned to change this landscape, opening doors for more diverse investors to benefit from fixed-income opportunities.
The pilot was conducted after receiving initial approval from the UAE’s Regulatory Lab under the Securities and Commodities Authority (SCA). This collaboration is part of a strategic push to provide flexible regulations and frameworks that support safe, technology-driven testing phases. These measures aim to mitigate potential risks and ensure the highest levels of security during experimental rollouts.
Mohamed Abdelbary, Group CEO at ADIB, emphasized the strategic importance of the initiative: “Sukuks are a valuable asset class that align with Islamic finance principles. We aim to make them more accessible to retail clients. This effort is part of our 2035 vision to be the world’s most innovative Islamic bank. By partnering with fintechs, we are launching pioneering solutions that cater to evolving customer needs.”
ADIB’s collaboration with the Regulations Lab and the SCA paves the way for a comprehensive legislative system that facilitates the development and safe testing of fractional sukuk technology. This new system will enable digital division of sukuks into smaller, affordable portions, allowing individual investors to collectively purchase shares of corporate sukuks without the need for substantial capital.
The pilot aims to accelerate the availability of this technology in the market, creating a safe and transparent investment environment. Once fully launched, retail investors will be able to build customized sukuk portfolios starting at $1,000. This innovation will allow consumers to tailor their investments based on risk appetite, preferred sectors, maturity periods, desired returns, and credit ratings.
Through these advancements, ADIB is poised to redefine sukuk investing, empowering retail investors with broader access and greater flexibility in diversifying their portfolios.
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