The Challenges Of The Sukuk Industry

The execution of Kingdom of Saudi Arabia and MENA's economies have surpassed world development. In the interim, Saudi's non-oil division has conveyed quickening development rates as the economy differentiates. Supported by hearty GDP development and macroeconomic security, shopper certainty is well over the provincial normal. Developing private credit and expanded open uses on framework and different activities give a wide premise to powerful open doors over the Middle East, however in Saudi Arabia these are interpreting into especially solid and maintained development in household request. KSA itself has never been more dedicated to supporting financial development. Powerful development in government incomes is supporting twofold digit increments in government consumptions on social, base, and other ventures. Maybe significantly more critical in the long haul, an undeniably deregulated and focused financial environment is supporting a blast of business arrangement as the private area plays an inexorably noticeable part in the economy (AT&T

Securitisation is the process of taking an illiquid group of assets and transforming them into securitises through financial engineering (Gallant, 2009), and it involves two steps. In the first step, an originator- a company with loans or other income-producing assets, selects the assets it wishes to remove from its balance sheet, and combines them together in a reference portfolio. The portfolio is then sold to a Special Purpose Vehicle SPV - a financial institution specified in the purchasing of the assets and realisation of their off balance sheet treatment for legal and accounting purposes

This way, such is critical to acknowledge the need to strengthen policy coordination and regulatory harmonization among the ASEAN economies. The experiences that can be borrowed from recent events on the European Union highlight the significance of adopting a regional perspective to financial stability. A supranational oversight mechanism is likely to be of vital important in a single market to facilitate financial services. It is essential that a single resolution regime that has a common backstop such as deposit insurance is considered in

These included deregulation of financial markets, globalization and the increasing number of cross border transactions. All these resulted in the increment for opportunities in financial engineering. Through securitization, one increases the capacity to lend of a Foreign Investment. Furthermore, he does not have to search for additional capital or deposits. It is gaining worldwide recognition as the most innovative form of asset financing. The profiling as well as the placement of different risks and rights of a receivable with most efficient owners is one of the most important impacts of securitization. Securitization provides the following

In this case study on investment-linked takaful, there are some shariah issues. The following are some but not limited Shariah issues at the conception of the contract, the fund management and at the level of distribution of profit.

And due to that, Ingress Sukuk Berhad (ISB) was act as a Special Purpose Vehicle (SPV) to govern the whole operation related to the ijarah sukuk. The ijarah sukuk issued by ICB commencing in July 2004 and expected to be mature at July 2011, a 7 years of ijarah sukuk maturity. But unfortunately, Ingress Sukuk Berhad (ISB) ijarah sukuk defaulted on 13th July 2009 due to few reasons. There were 9 well-known companies at that time were listed as the sukuk holders for this sukuk issuance of ISB which are CIMB Berhad, Maybank Berhad, Petronas Berhad, RHB Berhad, ING Berhad, MAA Berhad, KWAP, AFFIN Bank Berhad and HSBC Berhad. Figure 2 explained the ijarah sukuk structure applied by

“The Effect of new AAOIFI standards on Sukuk in choosing the most authentic Islamic principles” based on the title itself wanted to show how the changes of the new AAOIFI standard effecting industry players of Sukuk not to stress on Sukuk matters.

Methodology used in this report is explanatory research case study and qualitative research method where data regarding the sukuk defaults and shariah issues in Sukuk Asset-Based and Sukuk Asset-Backed are being collected. From these data collection, the development of theory can be focused through an approach of case studies and this method can relate to the growing issues of sukuk defaults. (Eisenhardt, 1989; Yin, 1994).

In today’s financial world systems, methods have been developing exponentially that reduce risk and increase the profits of investors who are financially able and willing to commit funds to investments, becoming part of the global financial system. The methods are sophisticated and require financial experts who are entrusted to make the right choices in arranging the best investment plans that will benefit these investors. One of these increasingly popular methods is asset securitization. Measures in the application of this particular method have been improving, especially since the market crash of 2008.

Liquidity is a vital part of any security market. Liquidity expense is commonly incorporated with the cost of a security. Higher liquidity inferred lower holding cost for the bond. Illiquidity suggests that the investor will bring about higher expense for holding the stock of the said bond. Market liquidity is influenced by various patterned, auxiliary, and approach related components. Leven however liquidity estimation is a troublesome errand and subject to discuss yet liquidity in government security markets is of enthusiasm to policymakers on account of the a wide range of capacities these business sectors perform inside of the budgetary framework. Fluid security market gives the administrations less expensive financing choices. A genuine fluid business sector will draw out the effective cost of Government securities (yield) which are generally used to cost and to fence different sorts of securities. For proficient clearing and settlement frameworks to perform their sought part, these securities are acknowledged as insurance for different money related exchanges and as a souring so as to wellspring of liquidity to cover startling occasions liquidity utilizing these advantages. An illiquid security business sector will have low transmission instrument for usage of financial arrangement. Fluid markets require littler liquidity premium to hold resources and the same helps government with lower financing cost alternatives. Value contortion in fluid markets is insignificant

Securitisation is a sophisticated process with many partakers involved, this essay will discuss each member before discussing the process. The participants of securitisation include: originator, Special purpose vehicle (SPV) or Structured investment vehicle (SIV), credit enhancer, credit rating agency, trustee, servicer, borrowers, underwriter and investors.

To properly analyze fixed-income securities, we established six major factors to consider. First is the security’s depth of the market. Have there been significant changes in the market since the financial crisis? The second factor is the main players in the market. This includes issuers and buyers of the financial instrument along with any other servicing institutions. The third reason, the purpose of the investment. Fourth is the current condition of the financial instrument’s secondary market. How active is it? Are there transaction costs? How are the instruments priced? The fifth factor is the risks in the investments. Last but not least is the sixth reason which is the financial instrument’s valuation. How should intrinsic value be

The East Asian Crisis started in 1997 due to a buildup of a large amounts of capital in the early 1990s inflows not due to foreign direct investments but because of bank loans and portfolios capitals which had reversed and led to great amount of macroeconomic pressures on the economie of east asian countries affected, leading to an appreciation of exchange rate, high interest rates, financial instability and stress.(Dornbusch, 2001). In reviewing Malaysia, we have to

Md. Rafiqul Islam, Department of Banking and Insurance, Faculty of Business Studies, University of Dhaka.

Moreover, a look at our neighboring securities regimes allows for inputs from sophisticated systems of securitization. The regulatory frameworks in Malaysia and Singapore not only provides for regulatory agencies for domestic corporations in their respective stock exchange but includes in their respective market infrastructure agencies for international business