Islamic capital markets and products : managing capital and liquidity requirements under Basel III / Simon Archer, Rifaat Ahmed Abdel Karim.

Format:

Book

Author/Creator:

Archer, Simon, author.

Abdel Karim, Rifaat Ahmed, author.

Series:

Wiley finance series.

THEi Wiley ebooks.

Wiley Finance Series

THEi Wiley ebooks

Language:

English

Subjects (All):

Finance--Islamic countries.

Finance.

Finance--Religious aspects--Islam.

Capital market--Islamic countries.

Capital market.

Financial institutions--Islamic countries.

Financial institutions.

Financial institutions--Religious aspects--Islam.

Physical Description:

1 online resource (381 pages) : illustrations (some color), tables, graphs.

Edition:

1st edition

Place of Publication:

Chichester, West Sussex, England : Wiley, 2018.

System Details:

Access using campus network via VPN at home (THEi Users Only).

text file

Summary:

Ensure Basel III compliance with expert analysis specific to Islamic Finance Islamic Capital Markets and Products provides a thorough examination of Islamic capital markets (ICM), with particular attention to the products that they offer and the legal and regulatory infrastructure within which they operate. Since Islamic banks act as asset managers, attention is paid to the regulatory challenges which they face in the light of Basel III, as regards both eligible capital and liquidity risk management. The authors of the chapters are professionals and practitioners, and write from experience. The editors also contributed to some of the chapters. The markets and products covered include Islamic equities, Islamic investment certificates (Sukūk) which are Shari'ah compliant alternatives to conventional bonds, and Islamic Collective Investment Schemes. The coverage of legal and regulatory issues includes an examination of the implications for ICM of securities laws and regulations and of Basel III, as well as collateralisation issues. Shari'ah compliance aspects, in terms both of the selection criteria for Islamic equities and of the 'purification' of impermissible components of income, are also examined in some detail, as are the implications of Basel III for eligible capital in general and for Shari'ah compliant capital instruments in particular. A similar analysis is also made of the implications of the Basel III requirements for liquidity risk management and high quality liquid assets (HQLA), including Shari'ah compliant HQLA. The book concludes with three case studies, two describing the ICM in Malaysia and Bahrain and a third which describes Sukūk issued as Shari'ah compliant capital instruments, followed by brief concluding remarks by the editors.

Contents:

Cover

Title Page

Copyright

Contents

Foreword

Acknowledgements

About the Editors

Chapter 1: Overview of the Islamic Capital Market

History of the ICM

Geographic Spread

Key Principles for Shari'ah-Compliant Financial Instruments

Shari'ah-Compliant Instruments

Shari'ah-Compliant Investors

Shari'ah-Compliant Equity Indices

Dow Jones Islamic Indices

FTSE Shari'ah-Compliant Indices

S&amp

P Shari'ah-Compliant Indices

MSCI Barra Islamic Indices

STOXX Islamic Indices

Other Islamic Indices Providers

Shari'ah-Compliant Collective Investment Schemes

Takaful (Islamic Insurance) Institutions

Sukuk

Sukuk in 2014

Sukuk in 2015

International Sukuk Issuance

Ijarah

Criticisms of Sukuk Issuance Practices

Sukuk Indices

Sukuk Trust Certificate Programmes

Rule 144A and Regulation S

International Islamic Liquidity Management Corporation (IILM)

Banks: Capital and Regulatory Issues

The Definition of Capital

The Capital Weights of Banking and Trading Book Assets

Market Liquidity: The Outlook for Marketable Assets

What is 'Liquidity' in Markets?

Why Now?

Has Market Liquidity Declined in Recent Years?

Could There be a Market Panic?

What Liquidity, in the Form of Market Makers' Capital, Can Do and What It Cannot

The Current State of Play

Should Regulators be Worried?

What If This Does Not Work?

New Policies

Conclusion

Chapter 2: Islamic Capital Markets and Islamic Equities

Shari'ah Compliance Criteria for Equities

Securities, Funds and Markets: Islamic Equities

Islamic equity indices

Islamic equity indices and performance comparisons with conventional indices

Regulatory Aspects: ICM and Basel III Requirements

Malaysian ICM regulations and the Basel III Accord

Conclusion.

Chapter 3: Sukuk - Unlocking the Potential for Economic Development

General Characteristics of Sukuk

Asset-Backed vs. Asset-Based

Volume of Sukuk Issued

Originators of Sukuk

Sovereign and Quasi-Sovereign

Islamic Financial Institutions

Commonly Used Contractual Bases and Structures from All Sukuk Issued

'Quasi Fixed-Income' Sukuk vs. Equity-Based Sukuk

Asset-backed and Asset-based Sukuk

Shari'ah Issues With Asset-Based Sukuk

Specificities of Sovereign Sukuk

Ratings of Sukuk

Issuance of Sukuk and Secondary Markets

Demand Side

Supply Side

Bibliography

Chapter 4: Islamic Collective Investment Schemes

Shari'ah-Compliant Equity Funds

Shari'ah Screening of Equities

Shari'ah-Compliant Funds - Regulatory Issues

Shari'ah-Compliant and Conventional Returns

Commodities Funds

Islamic Real Estate Investment Trusts (iREITs)

Profit-Sharing Investment Accounts

Chapter 5: Legal and Regulatory Considerations Pertaining to Islamic Capital Markets

Securities Laws and Regulatory Regimes

What is a Security?

Enforcement

Offerings and Disclosure

Capital Markets Access

Financial Intermediaries

Collective Investment Schemes

Secondary Markets

Securitisations (Including Sukuk)

True Sales

Substantive Consolidation (Non‐Consolidation)

Regulatory Regimes for Asset Securitisations

Systemic Aspects of Legal Regimes

Different Legal and Regulatory Frameworks

Different Modes of Analysis

Enforceability in Purely Secular Jurisdictions

Legal Opinions in Financing Transactions

The 'Enforceability' or 'Remedies' Opinion

Specific Substantive Legal Opinions

Legal Infrastructure in Shari'ah‐Incorporated Jurisdictions

Bibliography.

Chapter 6: Regulatory Aspects of the Islamic Capital Market and Basel III Requirements

Eligible Capital and Capital Instruments

Common Equity Tier 1

Additional Tier 1 Capital

Tier 2 Capital

Shari'ah-Compliant Instruments and Basel III Capital Components

Additional Tier 1 Capital and Loss Absorbency for IIFS

Tier 2 Capital and Loss Absorption for IIFS

Liquidity Risk Management and High Quality Liquid Assets (HQLA)

Funding Liquidity, Market Liquidity and HQLA

Criteria for HQLA

HQLA and Credit Quality

HQLA and Price Stability

HQLA and Liquidity (Market-Related) Characteristics

Alternative Liquidity Arrangements and Shari'ah-Compliant HQLA

Chapter 7: Shari'ah Foundations of Islamic Equity Investment Criteria and Purification of Investments

The Islamic Equity Investment Criteria

Judgement Is Based on the Majority not the Minority

The Rule of One-Third

Rule of Dependence

The Maxim of What May Not Be Allowed Initially May Be Tolerated in Continuity

Total Assets or Market Value

Falling Out of the Criteria

Components of the Programme

The First Screen: Business of the Company

The Second Screen: Financial Ratios

Third Screen: Prohibition of Financial Instruments

The Limited Applicability of the Screens

Purification

The Meaning of Purification

Shari'ah Basis for Purification

The Issues

Profit from Borrowed Funds

Net or Gross

Purification vs. Screening

Deduct or Inform

Methods of Purification

First Method

Second Method

Third Method

Our Recommendation

Chapter 8: Collateralisation in Islamic Capital Markets

The Development of Shari'ah-Compliant Collateralisation Arrangements Related to the Need for, and Current Dearth of, HQLA to Meet the Changed Regulatory Environment for Islamic Banks.

The Key Stakeholders in the Development of the Collateralisation Element of ICM and Their Notable Developments in Regularising Collateralisation in ICM Across the 'Value Chain'

The 'Islamic Repo' and the Need for, and Current Dearth of, HQLA to Meet the Changed Regulatory Environment for Islamic Banks

Developing Market Practice and Identifying and Mitigating Risk in Collaterals, Guarantees and Collateral Management

Risks Specifically Associated with Islamic Collateralisation in ICM

Disclosure Risk, IOSCO Core Principle 16 and International Debt Disclosure Principles

Further Aspects of Risks Specifically Associated with Islamic Collateralisation in ICM

Chapter 9: Eligible Capital and Capital Instruments

Flaws in the Basel II Regime

Quality of Capital Under Basel III

Hybrid Debt Instruments

Deductions from Capital

Deferred Tax Assets and Minority Interest Assets

Provisions

Quantity of Capital

Capital Weights

Pillar 2 Capital

Effect of Basel III on Total Capital

Stress Testing

Resolution

Value at Risk vs. Expected Shortfall

Leverage Ratio

Basel III Capital and Islamic Banks - Further Considerations

TLAC Capital

Islamic Banks' Competitive Position

The Capital Weights of Banking and Especially Trading Book Assets

Basel III

Chapter 10: Regulatory Aspects of the Islamic Capital Market and Basel III Requirements - Shari'ah-Compliant Bank Capital Instruments

Bank Capital Requirements: Basel II vs. Basel III

Basel III-Compliant Common Equity Tier 1 (CET1) Instruments

Qualifying Requirements for Basel III-Compliant CET1 Instruments

Basel III-Compliant Additional Tier 1 Capital (AT1) Instruments.

Qualifying Requirements for Basel III-Compliant AT1 Instruments

Case Study: Abu Dhabi Islamic Bank (ADIB) USD1 billion, Perpetual Reg S Additional Tier 1 Mudaraba Sukuk

Case Study: Dubai Islamic Bank PJSC (DIB) USD1 billion Reg S Perpetual Tier 1 Capital Sukuk

Basel III-Compliant Tier 2 Capital (T2) Instruments

Qualifying Requirements for Basel III-Compliant T2 Instruments

Case Study: Hong Leong Islamic Bank Berhad (HLISB) MYR400 Million Ten-Year Ijarah Basel III-Compliant Tier 2 Capital Sukuk

Case Study: Maybank Islamic Berhad (MIB) MYR10 billion, up to 20 years, Basel III-Compliant Tier 2 Murabaha Sukuk Programme

Chapter 11: Liquidity Risk Management and High Quality Liquid Assets

Liquidity Risk Challenges - Funding Liquidity and Market Liquidity

High Quality Liquid Assets (HQLA)

Instruments That Qualify As HQLA: A Hierarchy

Liquidity Risk Management and HQLA in Islamic Banks

Shari'ah‐Compliant HQLA: The IILM Sukuk

Chapter 12: Malaysia's Islamic Capital Markets - A Case Study

The Beginnings of an Islamic Capital Market

Components of Malaysia's Islamic Capital Market

The Islamic Interbank Money Market (IIMM)

Bursa Suq Al‐Sila

Shari'ah‐Compliant Equities

Shari'ah‐Compliant Derivatives

Malaysian Sukuk and Sukuk Markets

Why Malaysia Dominates - Incentives for Sukuk Issuance

Malaysian Sukuk Issuance - Innovation, A Key Driver

Chapter 13: Bahrain's Islamic Capital Markets - A Case Study

The Rationale for Capital Market Development

The Path to a Sound Market

The Economic Outlook

The Emergence of the Modern Financial Market

Bahrain Bourse

Market Capitalisation

Introduction of an Islamic Finance Index

Bahrain Financial Exchange (BFX)

Access to Government Debt

Islamic Money Market Instruments.

Islamic Asset Management.

Notes:

Includes bibliographical references at the end of each chapters and index.

Description based on print version record.

ISBN:

9781119218838

1119218837

9781119218814

1119218810

9781119218845

1119218845

OCLC:

1012139239