Regulatory Frame Work & Development of Sukuk
From HodHood
Contents
Top 20 FREQUENT WORDS
sukuk 105 issuance 30 assets 29 islamic 25 contract 22 iifm 20 issuer 18 issues 18 asset 17 global 17 price 17 purchase 17 contracts 16 services 15 goods 14 agreement 13 ijarah 13 lease 13 murabaha 13 payment 13
DOCUMENT KEY POINTS
- alvi contents � introduction to iifm � industry overview � global sukuk structures � sukuk issuance � sukuk developments � sukuk challenges � recommendations for way forward � conclusion
- rere engineering of structural issuance procedures of sukuk by ijlal a
- � iifm s principal objective is to establish develop promote and regulate the islamic capital and money market on the principles of shari ah � iifm s role is that of a developer and catalyst of the islamic financial market encompassing both the short term money market and the longterm capital market
- iifm a vision mission � vision active and well regulated trading and capital flows across the full spectrum of shari a compliant financial instruments internationally � mission to achieve the vision by catalyzing both national and international trading infrastructure product innovation and information flow within strong transparent and well regulated standards and guidelines
- iifm a new services � new services under consideration as per iifm s mandate are � standardization of contracts market practices keeping innovation intact � it infrastructure development � r d and non commercial product development � information portal market development initiatives � template or working model for asset management etc
- � estimated annual growth for islamic capital market is between to malaysian capital markets � adopted a parallel islamic conventional approach in � now islamic capital market leaders � as at the end of � islamic equity securities a of total market � total capital market instruments us billion a c islamic instruments billion of total � total bond market billion a c islamic bonds account for
- � sharia compliant assets growing over the last years represent an estimated us billion banking assets approximately billion capital market � assets are held by over islamic financial institutions
- sukuk issued estimated issuance year listing of sukuk at lfx bse difx luxembourg listings and market capitalization lfx bse difx luxembourg size in million us years cumulative listed amount million
- global sukuk issuance estimated global sukuk cumulative projection us million est
- � sukuk manfaa ijarah the owner of leasehold rights of existing leased assets may sell the usufruct such assets through sukuk issues � sukuk manfaa ijarah mowsufa bithima the owner of leasehold rights of an asset to be acquired and subject to lease contract may sell the usufruct of such an asset through sukuk issues � sukuk milkiyat al khadamat proprietors wishing to undertake specific services may mobilize the cost of such services by pre selling the services and their expected benefits through sukuk issues � sukuk al salam proprietors wishing to produce provide specific goods commodities at a future date may pre sell such future delivery goods commodities through sukuk issues
- wishing to construct manufacture and deliver specific assets at a future date may seek the cost of such future delivery assets through sukuk issues � sukuk almurabaha proprietors wishing to acquire certain goods commodities to be on sold under a murabaha agreement may mobilize the cost of such goods commodities through sukuk issues
- the sukuk holder share in the risks and rewards of the partnership � sukuk al mudaraba an entrepreneur mudarib with a good business idea but without capital or little capital may mobilize sufficient funds for a proposed business project from capital providers through sukuk issues
- � sukuk almuzra a the principal owners of agricultural land or the owners of the lease hold rights to such land may mobilize funds for the cultivation of the land through sukuk issues
- � sukuk al wakala capital may be raised through sukuk issues to acquire certain assets or goods or services which are then entrusted to an agent wakil for management of the same on behalf of the owners
- ijara sukuk structure using spv sukuk holders investors periodic rentals sukuk proceeds and capital distributions periodic rentals and title to issuer lessor capital assets special purpose payments company to hold original seller owner of assets leases back assets as seller the assets in trust for the sukuk as lessee sukuk holders lease agreement proceeds for a fixed period of time istisna a sukuk structure the sukuk will be listed may be rated and will be authenticated by an internationally recognized shari ah board
- spv issues sukuk representing an underlying interest in the assets to raise corporate funds minimum other islamic lease assets financings assets spv sukuk primary subscribers
- musharaka contract � the responsibilities of the various parties to a musharaka contract are given below � both the investor and the enterprise contribute towards the capital � under a diminishing musharaka the enterprise buys out the investor s share over a period of time
- alternative diminishing musharaka whereby the partner agrees to buy out the bank s share over a period of time ownership bank partner ownership musharaka commonly used contractssukuk issuance ii
- the issuer will first execute the agency and trust agreement before entering into the purchase agreement � the issuer will lease the properties to the government of qatar lessee for a period of years � the issuer will appoint the lessee as the servicing agent to provide major maintenance for the properties on behalf of the issuer examples ii
- sukuk issuancewider shari ah acceptibility sukuk issue sukuk issue sharia h supervisory documents documents committee ssc review endorsement comments fatwa certificate of ssc signed signed members fee endorsement ssc meeting fatwa certificate signed signed payments approved not approved revert to issuer or arranger through iifm sukuk issuancewider shari ah acceptibility contd iifm to be involved right from the note beginning of the transaction in order to achieve wider acceptability from shari ah point steps to follow of view
- once the relevant documents on the sukuk the certificate of sak or issue received iifm will send the documents trust to the shari ah supervisory committee ssc purchase agreement for initial review sale agreement
- sukuk issuance contd
- sukuk challenges � non existence secondary market mainly due to the lack of critical mass
- conclusion � in order to achieve the objective of a developed sukuk secondary market there should be � greater cooperation among the industry players � better coordination between regulatory bodies and industry players � greater participation from corporate sector and financing of infrastructure projects � key support by regulatory bodies and regulatory framework � creation of international sukuk fund � shariah harmonization through endorsements phone no fax email iifm bateclo dot com
- box manama kingdom of bahrain
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DOCUMENT WORD ANALYSIS
Main Category
- AlHuda Material\sukuk islamic
KeyWords
sukuk issu secur debt malaysia investor issuanc islam bond issuer corporate billion governance malaysian rate structur bankable institut developed convention
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DOCUMENT REFERENCES
Number of Pages
22
Published Date
2006-12-03 18:06:15
