Sukuk Markets : A Proposed Approach for Development
The issuance of sukuk, as an instrument in Islamic finance, has been growing in recent years. Many policy makers and businesses are looking at the sukuk markets as sources of long-term financing. The paper identifies key issues impeding further dev...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/12/20470876/sukuk-markets-proposed-approach-development http://hdl.handle.net/10986/20702 |
| Summary: | The issuance of sukuk, as an instrument
in Islamic finance, has been growing in recent years. Many
policy makers and businesses are looking at the sukuk
markets as sources of long-term financing. The paper
identifies key issues impeding further development of sukuk
markets globally, namely, standardization of structures and
practices, investor protection concerns relating to
insolvency and governance regimes, and market liquidity. The
paper also offers approaches in developing domestic sukuk
markets and in accessing the international market. The
authors suggest that, in developing domestic sukuk markets,
policy makers use a framework similar to that of the
development of conventional bond markets, that is, by
establishing (1) well-functioning money markets, (2)
efficient primary markets and securities-offering regimes,
(3) a robust and diversified investor base, (4) a market
infrastructure that facilitates trading, price transparency,
and efficient clearing and settlement of transactions, (5)
derivatives market and hedging tools to support risk
management by issuers and investors, and (6) a credible
legal and regulatory framework. In accessing the
international market, the issues policy makers or potential
sukuk issuers should consider include awareness of and
knowledge of sukuk, legal foundation, taxation, governance,
and obligors' credit rating. |
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