London has the potential to be the prime hub, however it depends on their willingness to nurture this niche market within the UK. As you know Islamic finance is heavily dependent on reputation and perception, in addition to the metal market London outweighs Dubai in its validity of the Sukuk they issue, as people perceive London to be a more regulated and transparent market. However, Dubai has the upper hand when it gets to institutions and banks that are founded on the principals of Islamic finance and also the geographic proximity to the biggest markets (Saudi, Iran, Malaysia). Which is the reason why Middle Eastern Banks were chosen as the lead sellers of the UK Sukuk, as they ensure their investors on the validity of such instruments. This sector is still under developed and needs to be structured more efficiently as there is a lot of issues and controversy around it. For example, on the retail level it is transparency, it is almost impossible for the borrower to see if the bank has really traded the precious metal or not. Thus requiring a high level of trust between the bank and the customer. If London is willing to step up and create an educational hub for Islamic Finance and create new instruments and structures that cater the needs of the market, they will get the upper hand. If they decide not to do so, NASDAQ Dubai or Malaysia might emerge,as they are growing in rapid speed and gaining international credibility. At the time being, small institutions will have the lead as they have the clientele and the understanding of their target market, it is a very niche market with high barriers.

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