"There are still many countries where the legal and institutional framework is not explicit and transparent about Islamic finance, and the framework developed for conventional finance is being applied to Islamic institutions," Al Shaali said.

"It is unclear whether such an approach is sufficiently flexible to address and supervise the unique mix of risks and special operational features of Islamic finance. Significant weaknesses in the legal, governance and systemic liquidity infrastructure are impeding the spread of product innovations in Islamic finance and preventing effective supervision and risk management. There needs to be more done in terms of setting supervisory and regulatory standards tailored to Islamic banks. This is necessary to support industry development," he added.

Al Shaali also called for greater standardisation in Islamic finance, which would help reduce costs and speed the issuance of Sharia-compliant products.

"One way to promote this is through standardisation of, or agreement on, a set of fatwas issued by Sharia scholars. Some jurisdictions are helping industry practitioners by collating fatwas issued in their markets to serve as a useful aid to those structuring Islamic financial transactions," he said.

Al Shaali explained to the audience how DIFC is helping the Islamic Finance industry in dealing with key challenges.

"DIFC provides a clearly defined legal and regulatory framework that facilitates innovation in the field of Islamic Finance," he observed.

One of the examples of DIFC's innovative initiatives aimed at the growth of the Islamic Financial industry, he said, is the creation of Waqf Trust Services - the first exclusive Islamic trust services provider in the world offering Sharia-compliant global trust services.

The Dubai International Financial Exchange (DIFX), Al Shaali said, "provides a conducive framework for the listing and trading of Islamic securities. The Dubai International Financial Exchange is the largest and most liquid exchange for sukuks, or Islamic bonds, in the world, with a total value of nearly 17 billion US dollars."

Other initiatives launched by DIFC to catalyse the growth of the Islamic Finance sector include industry benchmarks such as the Sukuk Index developed in collaboration with HSBC.

Al Shaali went on to talk about the DIFC's leading role in moving towards convergence and regulatory standardisation in the field.

"We are working with regional and international regulatory bodies and are entering into co-operation and information-sharing arrangements with other regulators and counterparties. We have signed over 27 bilateral MoUs with various regulatory authorities around the world, including the Mutual Recognition model with Malaysia," he noted.

The London Sukuk Summit, which is being held under the theme, 'Gearing up for UK Sukuk Originations', is supported by the UK Treasury, the Financial Services Authority (FSA), the City of London Corporation and the Islamic Financial Services Board (IFSB). It is also endorsed by UK Trade & Investment (UKTI), the trade promotion arm of the UK Department of Trade & Industry.