Fundamentals Of Islamic Finance

The global market for Sharia compliant financial products and services is continuing to grow at a rapid rate. One of the key issues most western financial institutions face is gaining an understanding of the nuances and differences between conventional and Islamic financial products. Designed to expel the confusion and complexity surrounding Islamic finance, the course will provide you with a firm understand of the structures, risks and opportunities in the global Islamic Finance marketplace.

Course Highlights

During this highly practical two-day course you will learn:

The distinguishing features and core principles central to Islamic investment and finance
The key role of Islamic law and how Sharia boards make their decisions
How to understand the distinctive asset classes and their role within modern financial markets
The practicalities of Salam and its derivative Istisna’a
The development and intricacies of Islamic Retail and wholesale banking
The impacts on wealth management and private banking

For details of the course trainer, please download the course brochure

Booking Information

Dates	Prices	Book This Course	Discount
01 - 02 Nov 2010	£ 1899		-
09 - 10 May 2011	£ 1899		-

Course Programme

An Introduction to the Islamic Financial Market

Understanding the key principles behind Islamic Finance and its international growth potential. This section will help establish the course parameters within the context of the growing global demand for Sharia'a compliant financial services.

Defining the Islamic Financial Marketplace
The rationale for the growth in Sharia'a compliant financial products
Exploring how the market has evolved internationally to date
Its importance, role and relevance in today's financial world
Riba (Usury) and its prohibition
Gharar and Maysir (Uncertainty and speculation)

Understanding the Core Principles of Islamic Investment & Finance

An introduction to the simple Islamic rules that recur in the structuring and execution of Islamic Financial transactions.

What is the role of Islamic Law?
Understanding the role and importance of the Sharia'a
Comparing the differences between Islamic and conventional finance

What is permitted and prohibited under Islamic law
The process of structuring a Sharia'a compliant product

Understanding the guidelines

The convergence of practices under AAOIFI and IFSB guidance
Why certain preferences have developed in the GCC compared to Southeast Asia

Overview of the Sharia'a Tools

Discussion of how riba affects contracts in a practical way
Overview of the most commonly applied Islamic contracts
Discussion of their general precepts, strengths and weaknesses
How do these change a bank's balance sheet structure

Understanding Asset Classes

This segment introduces participants to the nominative Islamic financial contracts and places them in context with the principles as discussed previously.

Murabaha contract (sales)

Defining Murabaha contract
Murabaha on Credit – Deferred Payment
Late payment treatment
Murabaha Syndicate Trade Mechanics
Revolving Murabaha

Case study: A micro case to stimulate discussion relating to choice of asset type for specific purposes

More Islamic Asset Classes

Tawarruq

Cash murabaha concepts of tawarruq and bai al ainah contrasted
Their market popularity discussed
Applications to replace existing debt or synthesise revolvers reviewed

Ijara (leasing)

Basic operating ijara
jara muntahia bi tamleek
AAOIFI and IFSB standards
Applications in the modern financial world

Salam (Forward Sales)

Defining the contract
Parallel Salam
AAOIFI and IFSB standards
Applications in the modern financial world

Istisna (Construction or Manufacturing)

Defining Istisna contract
Parallel Istisna
AAOIFI and IFSB Standards
Applications in the modern financial world

How to organise money in Islamic Finance

The profit and loss sharing contracts: musharaka and mudaraba

What are the broad Islamic rules
How do these mesh with modern business combinations and special purpose concepts

Musharaka (Partnership)
Mudaraba (Silent Partnership)
Wakalah (Agency)

Applications and Considerations for Wealth Management & Private Banking

Understanding the core principles of Islamic Investment
Screening issues
Considerations for the investment manager
Providing clients with Sharia'a compliant
Advisory services
Funds Management challenges
Stock market funds
Islamic hedge funds

The Islamic Capital Market

Getting to grips with the Islamic Capital Market structures
Defining sukuk
Deal origination

Where and how is the market developing
What is the evolution of instrument selection
GCC and Malaysian convergence in the sukuk space

Why certain nominative contracts may be applied easily in the sukuk space, and others are more problematic
Syndications compared to sukuk

Case study: Qatar Global Sukuk – case study of the typical sukuk al ijara.

The Trouble with Derivatives & Sharia'a

Four common risk management tools
Understanding the Sharia'a limitations of derivatives due to the need to prevent riba
Sample of the simple FX hedge

Regulatory and Capital Issues

Who are the key regulatory bodies
How do these interact in the global system
What are the main regulatory challenges of Islamic financial institutions

Profit Sharing deposits – equity, debt or quasi equity
Displaced commercial risk
What are the proper ways to understand instrument risk

Review on the Whole Process: how are Sharia'a Decisions made?

How is the choice of law managed in transactions?
What are the procedures of Sharia'a opinion delivery?
What influences the steps and process?
We first look at the process for Sharia'a committees, then return to a prior exercise in order to determine how the process worked.