Islamic Capital Markets and Products: Managing Capital and Liquidity Requirements Under Basel III
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.
About the Authors
Chapter 1: Overview of the Islamic Capital Market
By Simon Archer, Brandon Davies and Rifaat Ahmed Abdel Karim
Chapter 2: Islamic Capital Markets and Islamic Equities
By Nor Rejina Abdul Rahim
Chapter 3: Sukuk – Unlocking the Potential for Economic Development
By Dr. Sayd Farook and Redha Al Ansari
Chapter 4: Islamic Collective Investment Schemes
By Simon Archer and Brandon Davies
Chapter 5: Legal And Regulatory Considerations Pertaining to Islamic Capital Markets
By Michael J.T. McMillen
Chapter 6: Regulatory Aspects of the Islamic Capital Market and Basel III Requirements
By Musa Abdul-Basser
Chapter 7: Shari'ah Foundations of Islamic Equity Investment Criteria and Purification of Investments
By Mohamed A. Elgari
Chapter 8: Collateralisation in Islamic Capital Markets
By Richard Thomas
Chapter 9: Eligible Capital and Capital Instruments
By Brandon Davies
Chapter 10: Regulatory Aspects of the Islamic Capital Market and Basel III Requirements – Shariah-compliant Bank Capital Instruments
By Rafe Haneef
Chapter 11: Liquidity Risk Management and High Quality Liquid Assets
By Simon Archer and Rifaat Ahmed Abdel Karim
Chapter 12: Malaysia’s Islamic Capital Markets – A Case Study
By Obiyathulla Ismath Bacha and Daud Vicary Abdullah
Chapter 13: Bahrain’s Islamic Capital Markets – A Case Study
By Dr Hatim El-Tahir
Chapter 14: Sukuk Issued as Regulatory Capital Instruments for Basel III Compliance – A Case Study
By Abdullah Haron
Chapter 15: Concluding Remarks
By Simon Archer and Rifaat Ahmed Abdel Karim
Appendix A: Nominate Contracts Employed as a Basis for Shari’ah Compliant Financial Transactions
Appendix B: A Note on Market Index Providers
SIMON ARCHER is a visiting professor at the ICMA Centre, the ground-breaking collaboration between the securities industry and Henley Business School, University of Reading (also UK). In addition to teaching, he has served as a consultant to the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB). In 2010, the Central Bank of Bahrain and Kuwait Finance House - Bahrain presented Professor Archer with a special award to recognise his contributions to the field of Islamic Finance.
In addition to being co-editor of Takaful Islamic Insurance: Concepts and Regulatory Issues and co-author of Islamic Finance: The New Regulatory Challenge, Second Edition (published by Wiley), Professor Archer is also co-author of the CCH International Accounting/Financial Reporting Standards Guide and the author of a considerable number of academic papers on international accounting and on accounting, finance, and related issues in Islamic financial institutions.
RIFAAT AHMED ABDEL KARIM was previously the CEO of the International Islamic Liquidity Management Corporation (IILM). He is a globally respected pioneer in the development of Islamic finance, and served as the inaugural Secretary General at both the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Services Board (IFSB).
Professor Karim received the 2016 Malaysian Royal Award for Islamic Finance. In addition to international recognition of his academic publications, which are mainly in tier-one international journals in the field of Islamic finance, he has garnered numerous accolades for his pioneering work, including the inaugural Euromoney Outstanding Contribution to the Development of Islamic Finance Award (2004) and the Islamic Development Bank Award for Islamic Banking and Finance (2010). He is the co-author of Islamic Finance: The New Regulatory Challenge, Second Edition and co-editor of Takaful Islamic Insurance: Concepts and Regulatory Issues.
Professor Karim is adjunct research professor at the International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance, Malaysia. He is also a visiting professor at the ICMA Centre, Henley Business School, University of Reading, UK.