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PART 1: ISLAMIC INVESTMENT BANKING: GLOBAL TRENDS

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PART 1: ISLAMIC INVESTMENT BANKING: GLOBAL TRENDS

1 Innovation, globalisation and diversification: the key to success for Islamic investment banking

Sohail Jaffer Introduction

The strengths and resilience of the Islamic banking sector Sukuk – a challenge to overcome for the sector

The future is bright

Compelling long-term prospects

2 Growth and development of Islamic capital markets – the Malaysian experience Zarinah Anwar

Introduction

Origins in meeting community needs Orderly growth

The critical role of the Shariah Advisory Council Current Islamic capital market landscape in Malaysia Pioneering the sukuk market

Broadening the range of listed Shariah-compliant products Building the base for Islamic fund management

Islamic structured products as a hedging instrument

Strong regulatory and facilitative tax frameworks are critical success factors Human capital development

Conclusion

3 Overview of Shariah-compliant investment banking: global challenges and opportunities post-global credit crunch

Saleh Jameel Malaikah Introduction

The impact of the credit crunch and beyond Modernising the Shariah governance process Islamic investment banking – innovate or stagnate Private equity the mainstay of Islamic investments The power of ‘bricks and mortar’

The wealth management revolution beckons

Product development and corporate governance need of the time for Islamic banking Takaful – the untapped financial services giant

Opportunities for GCC banks to expand beyond the regional frontiers The Sukuk market and beyond

Conclusion

4 Strategic choices for Islamic banks in service provision for home and overseas markets Rodney Wilson

Introduction

Extending the range of Islamic financial services The capacity of Islamic banks

Strategic options for Islamic banks Vertical or horizontal expansion Al Rajhi Bank in Saudi Arabia Al Rajhi Bank in Malaysia

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Dubai Islamic Bank Qatar Islamic Bank (QIB) Conclusion

5 London as the international centre for Islamic finance Gillian Walmsley

Introduction

A continued commitment to development Recent developments

Islamic finance at the London Stock Exchange Sukuk

Shariah-compliant exchange traded funds A centre of excellence and specialist expertise Looking to the future

6 Opportunities and challenges faced by Islamic banks in the UK Dr Aly Khorshid

Global market for Islamic financial services Shariah-compliant financial services Shariah advisory board members Roles of Shariah scholars

Government strategy for development of Islamic finance in the UK Impact on investment decisions

Risk management and Islamic banking

Islamic finance offers several answers to risk management in banks Sukuk and current UK legislation

Potential for Sukuk in the secondary market

Characteristics of secondary market Sukuk and the conventional debt market Limited number of instruments within the Sukuk market

The path to liquidity in the secondary market Treasury management of Islamic banking

Understanding of Shariah law, creates challenge for standardisation Future challenges

Growth and business development What more must be done?

Government intervention has to protect the taxpayer

7 M&A opportunities available in the MENA region and cross-border expansion of Islamic financial institutions (post global crisis)

Alexander von Pock Introduction

M&A: drivers and risks A look at the past Effects of the crisis Way forward

8 The outlook for Shari’ah-compliant investments including alternatives post global crisis Henry Chin

Defining Shari’ah-compliant investment

Overview of different financial instruments and structures Demand for Islamic finance

Sources of capital

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Capital mobility and allocation The challenges of Islamic finance

The outlook for Shari’ah-compliant alternative investments PART 2: ISLAMIC CAPITAL MARKETS

9 The Malaysian Sukuk market Zainal Hasfi Hashim

Rapid growth of the global sukuk market Impressive growth of Malaysian sukuk industry

Key growth drivers underpinning strong sukuk development Malaysia’s leading edge as a global sukuk hub

Facilitative rules for issuance process

Well-defined Shariah governance framework Competitive pricing

Innovative structures and human capital development Incentives for investment activities

Comprehensive infrastructure 10 Innovation in Sukuk structures Moinuddin Malim

Historical overview Basic structures and issues Structuring Sukuk

Rating and listing of Sukuk

The approach to structuring Sukuks Emerging market leader

Sukuk defaults Conclusion Appendix A Appendix B

11 The growth and development of Islamic capital markets following the global crisis Farmida Bi

Introduction

The growth of sukuk before the global financial crisis AAOIFI statement

Global financial crisis

Primary and secondary sukuk markets Sukuk defaults

Lack of transparency and untested restructuring Signs of recovery

Other positive signs The future

12 Islamic capital markets: the case for a more intelligent positioning in an evolving global industry

Ayman Khaleq Executive summary

Capital markets considerations applicable to Islamic capital markets products Legal form of investment vehicles

Regulation of Islamic products and investor suitability requirements Exchange suitability

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Nature and location of the assets

Enforcement and bankruptcy considerations Tax

Conclusion

13 Swaps – profit rate swap and cross currency swap Kareem Hussaini and Wanda Regina

The structure of global swap markets Profit rate swap

Cross currency swap

Summary of cash flow movement

An analysis of some pros and cons of the structures Some challenges

Credit risk and swaps Conclusion

14 Shariah-compliant financial intermediation: a natural fit for investment banking Zamir Iqbal

Introduction

Financial intermediation in Islamic financial system Shariah-compliant intermediation and investment banking Challenges for Shariah-compliant investment banking 15 Islamic liquidity management

Majid Dawood

The essence of liquidity Definition

Introduction

Current options and current concerns New and needed developments The future

Conclusion

PART 3: WEALTH MANAGEMENT 16 Post-crisis Islamic investment Gul Khan

Introduction

An opportunity for Islamic finance Equity funds

Other investments Sukuk

Conclusion

17 Buy side Shariah products Omar Saleem Asghar

18 Recent buy side innovations in wealth management Naveed Ahmad

Introduction

Markets and investor segments Product selection

Public equities Conclusion

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19 Innovations in Shariah-compliant mutual funds Rejina Rahim

Introduction

Innovation is not a strange concept in Islam Shariah assets breakdown

Malaysia Saudi Arabia

Customer profile surprises in Malaysia

Is Islamic asset management coming into the mainstream? Can Shariah-compliant mutual funds be a viable investment tool?

Issues plaguing Islamic asset management Is the party over for Islamic finance? Conclusion

20 Attractiveness of Luxembourg for Shariah-compliant investment funds and Sukuk Pierre Weimerskirch

An attractive segment

Increasing competition among countries and financial centres

How attractive is Luxembourg as a gateway for Sukuk and Islamic funds? Looking to the future

21 Irish domiciled Shariah-compliant investment funds Brian Higgins and Emmet Quish

Introduction

Ireland as a fund domicile

Key features of an Irish domiciled Shariah-compliant fund Irish fund legal structures

UCITS funds and compatibility with Shariah Latest developments in UCITS product – UCITS IV Non-UCITS Shariah-compliant investment funds Conclusion

22 Investor services to the Shariah-compliant mutual funds industry Richard Street

A breadth of funds Shariah funds structure Prohibited businesses

Prohibited instruments and activities Accounting-based screening

Maintaining a list of Shariah-compliant companies Dealing with a change in status

Income purification

Fund administration and custody Support for international development

23 Real estate Islamic funds; market analysis, opportunities and structuring techniques Anass Patel

Introduction

Real estate market overview and post-crisis trends Are Islamic real estate funds the panacea in the long run?

Structuring active real estate funds and sharia-compliant investments Islamic REITs in a non-listed environment

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24 Challenges and opportunities for the growth of Takaful Tommy Trask

PART 4: NEW TRENDS AND DEVELOPMENTS IN THE INTERNATIONAL ARENA 25 The GCC sovereign wealth funds and voluntary governance

Dr Zeinab Karake-Shalhoub Introduction

GCC SWFs

Portfolios of GCC SWFs

SWFs and the Santiago Principles Conclusion

26 The role of sovereign wealth funds in promoting Islamic investment banking Alberto Brugnoni

27 Improving the core under the Shariah overlay Dr Amin Rajan

Before the credit crunch: 2–2007 After the credit crunch: 2007–2010 Concluding remarks

28 The role of international centres promoting Islamic Finance like DIFC, Bahrain Financial Harbour, MIFC, London, Paris, Luxemburg and Dublin

Ken Owens

International centres – a little bit of background

International centres enabling the growth of Islamic finance Human capital

International tax issue for Islamic finance Regulating Shariah, audit and compliance Malaysian Islamic Financial Centre Dubai International Financial Centre Bahrain Financial Harbour

London – United Kingdom Paris – France

Luxembourg Conclusion

29 Islamic finance in international financial centres Nathalie Schoon

Islamic finance in international centres The role of international financial centres Global developments

The role of regional financial centres

Regional versus international, is one better than the other?

30 The convergence of Islamic and sustainable finance: the revival of common sense Natacha Guerdat

Introduction Sustainable finance Islamic finance

More than ethical screening Supporting change

Impact investing

Microfinance, convergence by objectives Conclusion

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31 The role of the UK as an international centre for Islamic banking and finance Mohammed Amin

Introduction Political stability

The English legal system The UK tax system Travel and the time zone

Professional resources and the network effect

Supportive UK government policy for Islamic finance A successful approach to adapting the UK tax system for Islamic finance

Equality of regulatory treatment and an open licensing approach Competition from other financial centres

Conclusion

32 Potential for Islamic investment banking in France Valéry Foussé

A completely new international situation What drives the French situation?

What will have impact on a long term basis?

Where Islamic finance investment banks will potentially have a role Where the competition is important and players are financially strong France tries to preserve its competitiveness and attractiveness

A political move ahead to enhance France’s financial market and open it to Islamic finance A strong mathematical school

French banks do have strong expertise in Islamic finance but … New entrants are welcomed but should be fathered

A vast potential of development for potential new entrants

33 Islamic banking in Turkey: the Istanbul Financial Centre plans further expansion Paul Wouters

Preparing for a new phase

34 Technology trends in Islamic investment banking: towards best of breed solutions Bill Willison

PART 5: SHARIAH, REGULATORY AND SUPERVISORY FRAMEWORK 35 Islamic investment banking and European regulation

Tim Plews

The current position The scope of this chapter Global financial turmoil

Islamic finance and the global financial turmoil Islamic investment banking and the turmoil

EU regulatory policy-makers and Islamic investment banking A growing profile within Europe

The EU’s regulatory structure

A ‘do-nothing’ approach towards EU regulation? The exceptional position of London and the UK The rest of Europe is not standing still

Islam’s political dynamic

Islamic investment banking: articulating its ethical proposition Who should provide an education on Islamic finance?

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What these institutions can do

The key points for communication to the European commission Islamic finance lacks a global regulator – does that matter? So what should happen next?

36 The role of Shari’ah boards and the evolution of underlying Shari’ah principles Mohd Daud Bakar

Introduction

Shari’ah board: is it a Shari’ah advisory or Shari’ah supervisory board? Who is a Shari’ah board member?

What are the roles and duties of a Shari’ah board?

An overview of the evolution of some underlying principles in Islamic finance Conclusion

37 Rethinking the strategic significance of Shari’a supervision boards Abdel-Maoula Chaar

Introduction

Shari’a boards’ interlocks effect on the Islamic financial field The case study of the Lebanese Islamic banks

The institutionalisation effect of Shari’a boards Conclusion

38 The role of IIFM in the global expansion of Islamic capital and money market Ijlal A. Alvi

Islamic capital and money market IIFM’s role

IIFM master agreements for treasury placement (MATP) IIFM/ISDA Tahawwut master agreement (TMA)

Liquidity management in Islamic financial institutions (IFIs) Exploring I’aadat Al Shira’a (repurchase) potential

IIFM Wakala master agreement Sukuk

References

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