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    Global Sukuk Market - Overview & Trends Current Status, Developments and Key Challenges

    IIFM Specialized Sessions on Islamic Finance: Sukuk, Islamic Hedging and Liquidity Management

    Hosted by Bank Indonesia

    7th November 2017, Diamond Room, Grand City Surabaya, Surabaya, Indonesia

    Ijlal Ahmed Alvi

    Chief Executive Officer

    IIFM

    About IIFM

    History

    IIFM was formed under Royal Decree No. (23) Dated 2002 and is hosted by the Central Bank of Bahrain as a non-profit standard-setting organization.

    IIFM was founded due to the collective efforts of Central Bank of Bahrain, Islamic Development Bank, Autoriti Monetari Brunei Darussalam, Bank Indonesia, Bank Negara Malaysia (delegated to Labuan Financial Services Authority), and the Central Bank of Sudan.

    IIFM Vision Active and well regulated trading and capital flows across the full spectrum of Shariah compliant financial instruments internationally.

    IIFM Mission To achieve the Vision by catalyzing both national and international trading infrastructure, product innovation and information flow within strong, transparent and well regulated standards and guidelines. Promote acceptance and integration with mainstream markets.

    Mandate

    As a standard setting organization, the mandate of IIFM is to develop standardized Islamic financial documentation and product templates.

    1 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Current Focus

    IIFM focuses on providing well defined services to the Islamic Financial Services Industry (IFSI) as follows:

    Addressing the standardization needs of the industry in the areas of Islamic Capital & Money Market, Corporate Finance & Trade Finance

    Provide universal platform by bringing regulatory bodies, multilateral institutions, financial institutions, law and business advisory firms, stock exchanges, industry associations, infrastructure service providers and other industry stakeholders on a common platform through the creation of project specific global working groups and committees

    Facilitate market unification by introducing best practices at international level and achieving Shariah harmonization as well as legal and regulatory reforms through its efforts for the creation of a robust, transparent and efficient IFSI

    Creating industry awareness by organizing specialized seminars/technical workshops as well as standardization specific market consultative meetings

    Carry out research and publish reports specifically on Sukuk

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    About IIFM

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    Overall Objectives

    Development and promotion of Islamic Financial Services Industry

    Standardization of Islamic financial contracts and products templates relating to Islamic Capital & Money Market and Islamic Corporate & Trade Finance

    Achieving the required transparency and robustness of Islamic financial markets under the guidance of the IIFM Shariah Board

    Integration of Islamic financial markets into mainstream conventional markets

    3

    About IIFM

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    IIFM Published Standards To date, IIFM has published 10 documentation and product standards, a number of papers and reports as follows:

    2017: Islamic Credit Support Deed for Cash Collateral (Variation Margin)

    Credit Support Deed for Cash Collateral (VM)

    Schedule to Credit Support Deed for Cash Collateral (VM)

    2016: Islamic Foreign Exchange Forwards (IFX Forwards)

    Single Binding Waad based Standard

    Two Unilateral and Independent Waad based Standard

    Guidance Memorandum and Product Description

    2015: Islamic Cross-Currency Swap (ICRCS)

    First Leg Cross-Currency Swap (Wa'ad - Two Sales)

    Second Leg Cross-Currency Swap (Wa'ad - Two Sales)

    Product Description

    2014: Master Collateralized Murabahah Agreement

    Master Agreement

    Operational Guidance Memorandum

    4 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    IIFM Published Standards continued

    2013: Interbank Unrestricted Master Investment Wakalah Agreement

    Master Agreement

    Operational Guidance Memorandum

    2012: Islamic Profit Rate Swap (IPRS)

    Two Sale Waad Structure

    Fixed Profit Rate

    Floating Profit Rate

    Single Sale Waad Structure

    Fixed Profit Rate

    Floating Profit Rate

    Product Description

    2010: Tahawwut (Hedging) Master Agreement

    Master Agreement

    Explanatory Memorandum

    2008: Master Agreements for Treasury Placement

    Master Murabahah Agreement

    Master Agency Agreement for the Purchase of Commodities

    Structure Memorandum

    5 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Research Papers

    IIFM Paper on EMIR & Dodd-Frank Act on Derivatives and Impact on Islamic Hedging Products

    IIFM Reference Paper on Iaadat Al Shiraa (Repo Alternative) and Collateralization (Structuring Possibilities)

    IIFM Concept Paper on Islamic Profit Rate Swap

    IIFM Concept Paper on Unrestricted & Restricted Wakalah

    IIFM Concept Paper on Sukuk Standardization

    IIFM Structure Papers on Islamic Foreign Exchange hedging products

    Numerous presentations on Islamic Liquidity Mangement, Hedging in Islamic Finance, Sukuk and other topics

    Sukuk Reports

    Sixth Edition (2017)

    Fifth Edition (2016)

    Fourth Edition (2014)

    Third Edition (2013)

    Second Edition (2012)

    First Edition (2010)

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    IIFM Published Standards continued

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    IIFM Standards Under Development Current Priority Areas of Work

    Risk Participation Agreement (funded and unfunded) for Islamic trade finance related business is in market consultation phase

    Sukuk Standard Documentation and Guidelines (project to commence in 2018)

    Islamic Syndicated Financing Documentation standardization

    Consultative meeting under planning for Q3 2018

    Islamic FX & Commodity Hedging/Investment Standards

    Consultative meeting under planning Q2 2018

    Gold related products and documentation standardization

    - Consultative meeting under planning for Q1 2018

    7 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Sukuk Market Current Status

    a) Total Global Sukuk Issuances (International & Domestic)

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    Total GLOBAL Sukuk Issuances (Jan 2001 September 2017) All Tenors, All Currencies, in USD Millions

    8

    Total Global Sukuk Issuances as September 2017 USD 918,913 Millions

    Source: IIFM Sukuk database

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Total INTERNATIONAL Sukuk Issuances (Jan 2001 Sept 2017) All Tenors, All Currencies, in USD Millions

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    Total International Sukuk Issuances as of September 2017 USD 212,727 Millions

    Source: IIFM Sukuk database

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    10

    Total DOMESTIC Sukuk Issuances (Jan 2001 - September 2017) All Tenors, All Currencies, in USD Millions

    Total Domestic Sukuk Issuances as of September 2017 USD 706,186 Millions

    Source: IIFM Sukuk database

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Sukuk Market Current Status

    b) Total Global Sukuk Issuances Breakdown by Issuer Status

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    Global Sovereign Sukuk Issuances (Jan 2001 Dec 2016) All Tenors, All Currencies, in USD Millions

    11 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Global Corporate Sukuk Issuances (Jan 2001 Dec 2016) All Tenors, All Currencies, in USD Millions

    12 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    Global IFIs Sukuk Issuances (Jan 2001 Dec 2016) All Tenors, All Currencies, in USD Millions

    13 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    Global Quasi-Sovereign Sukuk Issuances (Jan 2001 Dec 2016) All Tenors, All Currencies, in USD Millions

    14 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    DOMESTIC Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

    15 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    DOMESTIC Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

    INTERNATIONAL Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

    17 IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7th November 2017

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    INTERNATIONAL Sukuk Issuances by Issuer Status All Tenors, All Currencies, in USD Millions

    IIFM Specialized Sessions on Islamic Finance, Surabaya, Indonesia, 7

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