Sukuk innovation needs to go further
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Sukuk, which is probably Islamic finance's most popular product, has of late gone through a fair bit of innovation. As opposed to their earlier structures which were nothing but Shariah-compliant straight debt, some of today's sukuk come with a variety of features. Broadly speaking, there are two broad thrusts in the innovation that have taken place. First, the use of embedded options for better risk management/proling. Second, innovation seeking to overcome limitations like the need for physical underlying assets. Though options - especially the exchange-traded variety - are still anathema to a majority of the fuqaha (Shariah scholars) fraternity, their use within sukuk structures appears to be booming. A wide range of sukuk, originating from diverse geographic jurisdictions, come with embedded options.
Sukuk , Risk sharing , Islamic finance
Bacha, O. I. (2018). Sukuk innovation needs to go further. In The Malaysian Reserve, (1 October 2018).
TMR Media Sdn Bhd
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