Ust Hj Zaharuddin Hj Abd Rahman One must refrain from making a direct comparison between Islamic banking and conventional banking apple to apple comparison. This is because they are extremely different in many ways. The key difference is that Islamic Banking is based on Shariah foundation.
These securities—which make up the Citi Sukuk Index—had an average maturity of 4. As a result, few securities enter the secondary market to be traded.
Furthermore, only public Sukuk are able to enter this market, as they are listed on stock exchanges. The secondary market—whilst developing—remains a niche segment with virtually all of the trading done at the institution level.
From a Sharia perspective, certificates of debt are not tradable except at their par value although a different view is held by many in Malaysia. Consequently, Sukuk holders are entitled to share in the revenues generated by the Sukuk assets as well as being entitled to share in the proceeds of the realization of the Sukuk assets.
After that they or some sukuk and bonds may be bought and sold by brokers and agents, mostly on the over-the-counter OTC market, but are also available on some stock exchanges around the world. Sukuk should indicate partial ownership of an asset.
Bonds indicate a debt obligation. The assets that back sukuk should be compliant with Shariah. The face value of a sukuk is priced according to the value of the assets backing them.
Bond pricing is based on credit rating, i. Sukuk can increase in value when the assets increase in value. Returns from bonds correspond to fixed interest. When you sell sukuk, you are selling ownership in the assets backing them.
In instances where the certificate represents a debt to the holder, the certificate will not be tradable on the secondary market and instead should be held until maturity. Sukuk investors in theory share the risk of the underlying asset and may not get all their initial investment the face value of the sukuk back.
The value payable to the Sukuk-holder on maturity should be the current market value of the assets or enterprise and not the principal originally invested, according to Taqi Usamani.
Sukuk may underwriters do not usually conduct the issuance and may not be required. These assets may be in a specific project or investment activity in accordance with Sharia rules and principles.
As a consequence, prior to the development of the sukuk market, the balance sheets of Islamic financial institutions tended to be highly illiquid and lacking in short and medium term investment opportunities for their current assets.
These sukuk are not common because their payments to investors represent debt and are therefore not tradable or negotiable according to sharia.
If diluted with other non-murahaha sukuk in a mixed portfolio they may be traded. These are "essentially" rental or lease contracts, or conventional lease-revenue bonds. The borrowers then make regular payments back to the financiers from the income stream generated by the asset.
In this sukuk the SPV does not buy an asset but agrees to buy one at a future date in exchange for advance payments.
The asset is then sold in the future for its cost plus a profit by an agent.Selected Books - Thinking, Fast and Slow; Selected Books - When China Rules the World The Rise of the Middle Kingdom and the End of the Western World. Comparison between Islamic and conventional banks Introduction The rapid growth of Islamic financial institutions across borders and continents is a testament to the buoyant nature of the Islamic banking .
Sukuk (Arabic: صكوك ṣukūk, plural of صك ṣakk, "legal instrument, deed, cheque") is the Arabic name for financial certificates, also commonly referred to as "sharia compliant" benjaminpohle.com are defined by the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) as "securities of equal denomination representing individual ownership interests in a.
The oldest Islamic finance consultancy in Europe - provides strategic institutional advisory worldwide to governments, central banks, public and semi-public institutions, regional and local authorities. It operates on a projects-basis model by establishing core teams of professionals and local experts in the legal and Shariah, fiscal and administrative, financial engineering and marketing areas.
The oldest Islamic finance consultancy in Europe - provides strategic institutional advisory worldwide to governments, central banks, public and semi-public institutions, regional and local authorities.
It operates on a projects-basis model by establishing core teams of professionals and local experts in the legal and Shariah, fiscal and administrative, financial engineering and marketing areas.
Selected Books - Thinking, Fast and Slow; Selected Books - When China Rules the World The Rise of the Middle Kingdom and the End of the Western World.