Fundamentals Of Islamic Finance

A comprehensive guide to the unique concepts and structures crucial to understanding and participating in the Islamic Financial Market today.

Course Highlights

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
22 - 23 Oct 2009	£ 1899		-
22 - 23 Apr 2010	£ 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

Case Study: The gold mine discussion piece: what are the questions that define riba?

Understanding Asset Classes

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

The contracts of exchange:
- Murabaha (instalment sales credit)
- Ijara (leasing)
- Salam (forward sales)
- Istisna’a (construction or manufacturing)
- Basic concepts
- Applications in the modern financial world
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

Case Study: Arabian Auto micro case to stimulate discussion relating to choice of asset type for specific purposes.

Arabian Auto and the contracts of exchange: Murabaha& Ijara

This segment builds on the micro case to show the steps involved in each form of contract sales / murabaha as compared to leasing / ijara. Firstly, the concepts are diagrammed, explained in Sharia’a and business contexts, then the micro case is revisited.

Understanding Salam and its derivative Istisna’a

This segment uses the micro case of Arabian Bottling to demonstrate the Islamic forward sales contract. Then it reverts to the need of Arabian Auto to build a new facility to diagram how the salam derivative istisna’a applies to construction transactions.

A different approach to Istisna’a

A short case based on a Malaysian istisna’a deal is used to show some of the conceptual differences between markets.

Musharaka and Mudaraba defined in the financial investment context

This segment touches on common utilizations of these concepts in different markets – retail and wholesale banking.

What are the main ideas of business organisation in Sharia’a?
How do these accommodate the formation of SPV’s, syndication financings and other commercial activities
How can a partnership concept be turned into a financing structure?
How free are partners to restrict their rights in the idealized Islamic musharaka?

Case Study:Micro case of Islamic Home Finco – which contract is best?

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

We first look at the process for Sharia’a committees, then return to Arabian Auto and its proposed acquisition of an American distributor; what do common American market practices mean in a Sharia’a context for installment sales and leasing contracts.

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.

Case Study: DP World – case study of an innovative approach to sukuk al musharaka

Principles & challenges relating to Derivatives & Sharia’a

Understanding Financial Risk Management

Understanding the Sharia’a limitations of derivatives
Getting to grips with the different types of risk from a Sharia’a compliance perspective
Dealing with:
- Profit or Yield risk
- Market risk
- Foreign exchange risk

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