April 2019
SHARIAH CAPABILITIES
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CORPORATE PROFILE
▪ Market Securities LLP (“MSLLP”) was established in 2002 in strategic partnership with Kyte Broking Ltd, based on experience andknowledge gained through equity derivatives and energy markets.
▪ MSLLP is a fully independent intermediary owned by its founding partners who are dedicated to providing customers with firstclass broking services and acts as Appointed Representative of the Kyte Broking Ltd.
▪ In 2013, the founders of MSLLP established Market Securities (Dubai) Limited (“MSD”) in the DIFC and in 2015 acquired KyteBroking Limited.
▪ Market Securities (Dubai) Limited (“MSD”) is regulated by the DFSA and authorised to deal in investments as well as advise onand arrange investments.
▪ For the purpose of this profile, MSLLP and MSD will collectively be referred to as “Market Securities”.
▪ Market Securities has offices in London, New-York, Paris, Geneva and Dubai.
▪ Market Securities has expanded its skill and experience to a variety of products and the business now covers multi-assetbrokerage services on a range of listed and OTC derivatives & securities.
▪ Market Securities is today specializing in a broad range of financial products including Cash Equity, Equity Derivatives, ForeignExchange, Futures & Options, Fixed Income, Interest Rates, Structured Products and Commodities markets.
▪ In-house structuring capabilities and cross-
asset expertise
▪ Independent approach with outsourced
hedging
▪ Bespoke investment solutions based on
risk-return requirements
▪ Market price optimisation via major
trading desks
▪ Efficient secondary market
▪ Multi-geographical coverage
An independent financial engineering team specialising in the
construction of bespoke investment solutions for institutional clients.
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STRUCTURED SOLUTIONS
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RANGE OF SHARIAH PRODUCTS
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RANGE OF SHARIAH PRODUCTS
MurabahaUsually short term, used for capital needs. Structured against a trade flow, used toarrange financing for raw-material purchases.
Fixed
Commodity Murabaha
Liquidity management and fund raising tool. Involves buy/sell of commodities onmajor commodity exchanges.
Fixed
Ijara (lease)Medium to long term financing under Islamic type of conventional lease product,backed by real asset. (Real Estate finance, Capital Equipment finance)
Fixed or Floating
Istisna’ Short to medium term financing, for project financing (Aircraft, Infrastructure) Fixed
SukukCapital market instrument similar to a conventional bond with a good secondarymarket potential.
Fixed or Floating
Contract Type Contract Application Rate Type
Sources: Market Securities Structured Solutions, Societe Generale, JP Morgan
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SHARIAH SOLUTIONS
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Assets
• Equities & Indices• FI & Credit• Commodities• Mutual Funds•Foreign Exchange
Packages
• Shariah Certificates• Islamic Product Vehicles
SHARIA SOLUTIONS
▪ Products can be adaptable to local
currencies
▪ Short to Long term investment horizons
▪ Regular Income or payment at maturity
only
▪ Can have full or partial capital protection
▪ Almost the same universe of underlying
assets as for conventional structures
Sources: Market Securities Structured Solutions, Societe Generale, JP Morgan
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SHARIAH CERTIFICATES(LIGHT)
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TRADE PROCESS AT INCEPTION
IssuerStructurer &
ArrangerHedging
AgentInvestor
1MarketCounterparty
34 2
SHARIA HEDGING
Series of Murabaha Transactions backed by Commodity
Wa’d – unilateral and exclusive promises to enter into a future Commodity MurabahaTransactions
Sources: Market Securities Structured Solutions, Societe Generale, JP Morgan
FATWA ON THE PROGRAMME LEVEL
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TRADE PROCESS
▪ 1: Client delivers 100% cash versus Shariah Certificates (Light Sharia) via Euroclear on the Delivery Versus Payment Basis(DVP). This means that there is no settlement risk.
▪ 2: Structurer/Arranger executes the transaction by delivering cash versus Shariah Certificates to the Issuer via Euroclearon the Delivery Versus Payment Basis (DVP). This means that there is no settlement risk.
▪ 3: Issuer delivers cash to a hedging agent whilst issuing Shariah Certificates under European Medium Term Noteprogram.
▪ 4: Hedging Agent executes a transaction in the market via Wa’d and books all interim payments as CommodityMurabaha.
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ISLAMIC PRODUCT VEHICLE (COMPREHENSIVE)
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Return Profile
- Wide Range of payoffs- Tailor made maturities- Islamic finance expertise
Risk Profile
- Partially or fully independent from Issuer’s credit risk
- Sharia compliant underlying assets
- Agreements with various market counterparties
ISLAMIC PRODUCT VEHICLE
▪ Flexible Sharia compliant issuance platform
▪ White labelled, cost efficient
▪ Issuance of Trust Certificates eligible for Sukuk classification
Sources: Market Securities Structured Solutions, Societe Generale, JP Morgan
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ISLAMIC PRODUCT VEHICLE
CELL A
EACH CELL IS SECURED BY A SPECIFIC TRUST ASSET
CELL B
CELL C
HedgingAgent A
HedgingAgent B
HedgingAgent C
CELL A Investor
CELL B Investor
CELL C Investor
Sources: Market Securities Structured Solutions, Societe Generale, JP Morgan
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ISLAMIC PRODUCT VEHICLE
Series of Certificates
CELL A
Underlying Wa’d +
Commodity Murabaha
Transactions
HED
GIN
G
CO
UN
TER
PAR
TY
INV
ESTO
R
Commodity Murabaha 1 (cost price)
Cost Price + Profit 1
Cost Price + Profit 2
Commodity Murabaha 2 (cost price)
Final Commodity Murabaha n
Cost Price + Profit n
Issue Price
Profit 1
Profit 2
Final Redemption Amount +Profit n
Sources: Market Securities Structured Solutions, Societe Generale, JP Morgan
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SHARIAH PRODUCT SAMPLES
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SHARIAH PRODUCT IDEASCollateralized Profit-Enhancing Repack Note
RE-PACK NOTE WITH CDS OVERLAYIssuer Special Purpose Vehicle (FATWA)Format EMTN, Note FormatCurrency (Quanto) USDIssue Date Trade Date + 3 WeeksCollateral Bond Kingdom of Saudi Arabia (US80413TAG40 - Yield 3.75%)MaturityReference Entity
17/04/2025 (matching the Collateral Bond)As per table below
Coupon As per table belowObservation Annual, Not Accrued Upon Default, 30/360Call Strike 100.00%Recovery FloatingSettlement AmericanRedemption 100% subject to Credit Event on Collateral and /or
Reference EntityListing Yes (Technical in Luxembourg)Delivery CashSettlement T+10
# Reference Entity Description Coupon (p.a.)
1 Auchan HoldingAuchan Holding, doing business as Auchan, retails consumer goods. The Company offers fresh food,electronics, home furnishings, apparels, and sports, as well real estate development. 5.00%
2 Arcelor MittalArcelorMittal produces steel. The Company manufactures cold rolled, electrogalvanized and coated steels, slabs, bars, and wire rods. ArcelorMittal serves customersworldwide. 4.90%
3 Republic of Italy Sovereign (BBB by S&P) 4.90%
4 ThyssenkruppThyssenkrupp AG manufactures industrial components. The Company produces flat rolled and cast steel, automobile parts, elevators and escalators, machine tools,bearings, nonferrous metals, and plastics. thyssenkrupp develops and manages real estate as well as designs and constructs factories. 5.20%
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5Y Historical CDS Spread
Auchan Holding SADIR ArcelorMittal Republic of Italy thyssenkrupp AG
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SHARIAH PRODUCT IDEAS100% Principal Protected Shark Note on S&P 500 Shariah Index
PRINCIPAL PROTECTED SHARK NOTEIssuer Special Purpose Vehicle (FATWA)Format EMTN, Note FormatCurrency (Quanto) USDIssue Date Trade Date + 3 WeeksGuarantor A- by S&P Rated BankMaturityUnderlying
5 YearsS&P 500 Shariah Index
Knock-Out Barrier 145%Rebate 115%Performance Final level/ Initial levelObservation At maturitySettlement European
Redemption
1) If at maturity, Underlying Performance < Knock-out Barrier: 100%+𝑀𝑎𝑥(0%, 𝐹𝑖𝑛𝑎𝑙 𝐿𝑒𝑣𝑒𝑙 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝐿𝑒𝑣𝑒𝑙−100%) ∗ Denomination
2) If at maturity, Underlyiing Performance > Knock-out Barrier: 115% * Denomination
Listing Yes (Technical in Luxembourg)Delivery CashSettlement T+10
Following product will repay an investor 100% back at maturity plus the upside participation of the S&P 500 Shariah index as long as the Underlying Index not closing at or above the Knock-Out Barrier at maturity only. If Underlying has closed at orabove the barrier then the product matures at 115% (Rebate).
0.85
0.95
1.05
1.15
1.25
1.35
1.45
1.55
1.65
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5Y Historical Performance
SHX SPX
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SHARIAH PRODUCT IDEASCapital Protected Note with Digital Profit
PRINCIPAL PROTECTED NOTE WITH DIGITAL PROFITIssuer Special Purpose Vehicle (FATWA)Format EMTN, Note FormatCurrency (Quanto) USDIssue Date Trade Date + 3 WeeksGuarantor A- by S&P Rated BankMaturityUnderlying
12 MonthsAs per table below
Capital Protection 100%Conditional Profit 6% p.a.Performance Final level/ Initial levelObservation At maturitySettlement EuropeanRedemption 1) If the Worst of Underlying is at or above the Profit
Barrier, then Capital Protection + Conditional Profit
Listing2) If the Worst of Underlying is below the Profit Barrier, then Capital Protection
Delivery CashSettlement T+10
# Reference Entity Description Profit Barier
1 Consumer Cyclical
CONTINENTAL AG
112%SOUTHWEST AIRLINES CO
DELTA AIR LINES INCADIDAS AG
2 Healthcare
BRISTOL-MYERS SQUIBB CO
118%ILLUMINA INCBIOGEN INC
ALEXION PHARMACEUTICALS INC
3 Semi-Conductors
MICRON TECHNOLOGY INC
123%NVIDIA CORP
APPLIED MATERIALS INCBROADCOM INC
0.3
0.8
1.3
1.8
2.3
2.8
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5Y Historical WOF Performance
Consumer Cyclical Healthcare Semi-Conductors
Market Securities Structured Solutions is part of Market Securities Dubai Ltd, a DIFC based entity which is authorized and regulated by DFSA. Market Securities Dubai Ltd was established in 2013 and is regulated by the DFSA and authorised to deal, advise and arrange investments. Market Securities has offices in London, New-York, Paris, Geneva and Dubai.
Danny Skutelis (Head of Structured Solutions)Danny Skutelis has started his professional career at Goldman Sachs in London in a Fixed Income Currency and Commodities department on a Macro Issuance Desk, responsible for newindex and tracker funds. Goldman Sachs was followed by UBS in London where Danny has started in Alternative Investment Strategies and moved into sales to Russia/CIS. After almost 4years with UBS, Danny was asked to join one of the biggest Inter-Dealer Brokers in the world – Tradition in order to set up a Russia/ CIS desk for a hybrid-engineering subsidiary of thecompany called TFS Structured Products. After a rapid expansion in Russia, Danny has driven the company into GCC by setting up a desk in Dubai office of Tradition. As of November 2015,Danny has established a Structured Solutions Desk at Market Securities Dubai a hybrid-engineering boutique.
Pulkit Sangal (Senior Associate)Pulkit Sangal is a Senior Associate within the Structured Solutions team at Market Securities Structured Solutions (part of Market Securities Dubai Ltd) covering Institutions across the MiddleEast. He began his career at Commerzbank AG in Dubai as a member of the Equity Markets & Commodities division representing the Private Banks Sales team in the GCC for 2 years. In hisrole at Commerzbank, Pulkit was responsible for providing tailored Cross Asset Investment Solutions to regional institutions. Pulkit has resided in the Middle East for over 20 years; hisqualifications include the Chartered Alternative Investments Analyst (CAIA) designation and an undergraduate degree in Economics from the Symbiosis School of Economics in Pune, India.
Shafiq Said (Quantitative Research and Structuring Analyst)Shafiq Said has joined the Structured Solutions team in 2017 as a Quantitative Research and Structuring Analyst to further strengthen our proprietary research and pricing capabilities.Shafiq has started his career at BnP Paribas Cardiff, followed by Bank CACEIS in France. Shafiq has earned a double Masters degree in Finance from EM Lyon Business School and UniversiteParis Ouest Nanterre La Defense in 2016. Shafiq is currently involved in structuration of proprietary index strategies and hedging products for our institutional clients.
Nikita Miagkov (Execution Analyst)Nikita has joined Structured Solutions team in June 2018 as an execution analyst to strengthen our execution and identify arbitrage opportunities for our clients. Nikita has started his careeras a fixed income and currencies sales-trader at Commerzbank AG in Dubai. Nikita brings a multicultural experience having lived and studied in the UK. Nikita is a MSc Finance degree holderfrom Cass Business School in London.
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ABOUT US
This material was produced by Market Securities (Dubai) Limited (“MSD”), a company regulated by the Dubai Financial Services Authority (“DFSA”) (firm reference number: F002425),
registered in the Dubai International Financial Centre with the company number of CL1474 and the registered address of Unit N2004 , Level 20, Emirates Financial Towers, Dubai
International Financial Centre, Dubai, 506859, United Arab Emirates.
MSD is authorised by the DFSA to provide services to Professional Clients only as defined in the DFSA Conduct of Business Rulebook. Therefore, this presentation is intended only for
Professional Clients and no other Person should act upon it.
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herein with others within MSD, and such other MSD personnel, associates or members may have already acted on the basis of this information (including by trading and communicating the
information contained herein to other clients). MSD, MSD’s personnel, associates or members (including those with whom the author may have consulted in the preparation of this
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DISCLAIMER
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The information contained in this communication is based on generally available information and, while it is based on material that MSD consider reliable, MSD may not have verified the
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(ver. Nov 15)
MARKET SECURITIES (Dubai) Limited
Emirates Financial Towers North 2004, DIFC, Dubai,
P.O.Box: 506859, United Arab Emirates
T: +971 4 374 1335
T: +971 4 374 1300
DISCLAIMER