US$ 2,750

“Trainings for Success”

Islamic Treasury

and

Risk Management Products

10 – 12 March 2020

Dubai, UAE

Accredited by:

Course Overview:

The course will be interactive with discussions, trading

games,team exercises and case studies to ensure delegates

learn by doing.

Identify and manage risk in Islamic Treasury

products

Comparative analysis of treasury and risk

management products in various jurisdictions

Application of various Islamic toolkits in the Islamic

money markets

Manage foreign exchange instruments and

associated rate risks

Course Methodology

The 3-day program presents a course that aims to analyze treasury and risk management

products and provide deep insight of various treasury key areas. Delegates will be lead through

the vocabulary and nomenclature of Islamic finance applicable to Islamic treasury.

Various Islamic toolkits will be examined to learn how they are applied in the ‘money market’

and risk management activities.

The course will also emphasise how Sukuk is relevant to Treasury activities – be it for liquidity

management, long term funding options or capital adequacy purposes. It will also look at how

the various Islamic tools are applied to manage forex and rate risks in the Islamic market.

The expert course directors will review various Sharia’a opinions in the market; starting with

AAOIFI and explain where and why variances from AAOIFI takes place in different markets.

The course is Suitable for:

Middle Office Operations

Recent entrants and experienced to the

OperationsDepartment (Back Office);

Other trading room support areas;

ALM

Internal, external and Shariah auditors;

Compliance, risk and Shariah officers;

Product Control;

Correspondent bankers

Vendors.

Islamic Treasury & Risk Management Products | 10-12 Mar 2020

Target Audience

Duration: Days Islamic Treasury & Risk Management Products

March 10-12, 2020

SESSION 1: The Nature of Money & Implication on Treasury

The rules of Sarf and contract

Riba Al-Nasiah

Discussion: identifying assets that may be traded or pledged from a Shariah perspective

Overview of traditional Money Market activities:

Deposit & Interbank transactions/tools

What are Tradable Instruments

SESSION 2: Key Treasury Functions

Understanding the role of Treasury in the Bank:

o Sources & Uses

o ALM

▪ Policy and function

Funds flow between the treasury and the departments

o Activity: how do funds flow between the Treasury and the Islamic bank’s business units?

Group Discussion: Traditional Intra-bank Relationship: Fund Transfer Pricing (FTP), Inter branch Pricing (IBP) etc… Will FTP or IBP change for Islamic treasury operation?

SESSION 3: Main Islamic Interbank Tool: Murabaha

Summary rules for Murabahah

Overview of OTC and Exchange markets for Commodity Murabaha.

Exercises - Team approach to different situations.

How can murabaha be used to manage excess funds

How can murabaha address a shortage of funds?

Breakage: What happens if you are balanced and face an unplanned inflow.

Back value: What happens if the murabaha steps are not executed correctly?

Compounding: Should compounding be permitted, if so how?

Standardized documents: IIFM, AIBIM

SESSION 4: Other Islamic Interbank Tools

Wakalah to do murabahah vs. Investment Wakalah - what’s the difference?

Standardized documents: IIFM, AIBIM

Case Study: Investment Dar vs. Blom Interbank Wakalah

Interbank Mudarabah and Musharaka

D A Y 1

Islamic “Money M Islamic “Money Market” Part I

Islamic “Money Market” Part II

SESSION 5: Islamic Liquidity Management with Central Banks

Central bank liquidity frameworks for Islamic banking.

Tools used in the absence of securities.

Excess Funds Management: Exercises in deconstructing different central bank programs.

SESSION 6: Introduction to High Quality Liquid Instruments: Examine different tradable tools and identify potential Shariah issues (if any)

Basel III, IFSB and Liquidity

Brief review of traditional tradable tools

Basic concepts and question of Tradability - Shariah guideline

Introduction to Sukuk - alternative Islamic tradable instruments

Short term, high grade issuance for Basel III:

▪ Exercises involving various central bank and high grade sukuk

▪ Contrast certain long term and short term sukuk

▪ Review of IILM role and sukuk

Group Exercises: How will sukuk be used in the following cases: Central bank open market operations; central bank liquidity facility; and inter-bank liquidity.

SESSION 7: Repo

Understanding a conventional repo

Why are repos not widely used in the Islamic market?

How could an Islamic repo work?

The IIFM solution

Alternative solutions

Exercise: GCC, Malaysian and offshore Islamic banks suffer a liquidity shortage. Each holds a pool of either high grade sukuk or of ABS sukuk, how will each apply a Repo concept?

Exercise: Examine the balance sheets of an Islamic bank and a window in the UAE. What assets are eligible for collateral or REPO? What are the positions of the banks in liquidity crunch?

SESSION 8: Alternative Funding and Capital Strategies: Issuing Tier II and Tier I Sukuk

Discussion of Basel loss absorbing capital instruments

Term Sheet Exercise: Review the following for consistency with Basel III.

o Kuveyt Turk Tier II

o Warba Tier I

Capital Management Exercise: Your bank has issued Tier I sukuk in USD but earns mostly in AED. You must make periodic payments in USD. Where should these payments come from? What risk is embedded in the payments and how can you manage this risk?

SESSION 9: Alternative Basel Capital Management Strategies

Tagged Investment Accounts

Asset bundling into segregated funds or securities

Dynamic Securitization

D A Y 2

Islamic Treasury & Risk Management Products | 10-12 Mar 2020

Managing Forex& Rate Risks

SESSION 10: Forex Transactions

Riba al fadl & implications for FX

Shariah analysis of the following basic tools

o Spot FX

o Split

o Forward

Cross rates

Group Discussion: Cross border investment and procurement by a GCC firm poses spot FX issues. Delegates will need to calculate cross rates and recommend the best spot FX strategy under the market and regulatory conditions affecting each leg of the firm’s proposed transaction.

SESSION 11: Managing FX Risk

This session is a series of problem solving exercises.

Understanding forward and swap rates. How are these different, and how will these be applied in our FX Risk solutions?

Shariah compliant forward alternatives:

o Islamic FX and Cross Currency Swaps

▪ Examples of tawarruq and interest free deposit products

▪ Case Study: Cross border investment by a GCC fund into a MENA (non-GCC) leasing company.

▪ Exercise: Deconstructing a swap product.

▪ Promise to deposit i.e. Cross Currency Deposit

o Promise based solutions – unilateral promise, two unilateral promises vs. bilateral promises

o Are these solutions on balance sheet or off balance sheet?

o How are these relationships exited?

Group Exercises: Customer based case study Wong’s Natural Concentrates will be used. Each will create an opportunity to craft a natural hedge, use one of the tools discussed, or to deconstruct the method applied. Each will require a solution for breaking the deal.

Summary: All Sharia’a compliant tools to manage FX risks

SESSION 12: Managing Rate Risk

Common tools in the Islamic market: Profit Rate Swap (PRS) and CCS

Profit Rate Swap Structures:

o Two Tawarruq on each trade date

o One long term fixed rate Tawarruq and multiple floating rate Tawarruq

o Promise based PRS

o Is PRS different from IRS?

o Cross Currency Swap vs. Cross Currency Deposit

o Are PRS and CCS on or off balance sheet?

Group Exercise: PRS vs. CCS – will there be any differences in underlying structure? Balance Sheet hedging.Kuveyt Turk currency risk challenge will be raised.

D A Y 3

Islamic Treasury & Risk Management Products | 10-12 Mar 2020

Abdulkader has over 30 years of diversified financial services experience. He consults for financial

institutions, regulators, and businesses about Islamic finance. Along with his expert team, Abdulkader works

on projects that include launching de novo Islamic banks and Islamic banking windows, policies and

procedures including Sharia’a policies, Sharia’a compliance, product development and structuring. Clients

include a diversified universe of financial institutions from North, the MENA region, Southeast Asia, Africa,

America, and Europe.

Abdulkader is a member of the International Advisory Committee for Islamic Capital Markets of the

Securities Commission of Malaysia. He acts as moderator for the Islamic Finance News (MIF) Issuers and

Investors Forum, an annual event produced by REDmoney Group highlighting capital markets activities for

Islamic securities issuers and underwriters. Abdulkader is director of Alkhabeer Capital (Jeddah) and Vice

Chairman of Alkhabeer International (Bahrain).

He is a graduate of The Fletcher School of Law & Diplomacy in international trade. Abdulkader earned a BA

with honors in Arabic and Islamic studies from the University of Chicago. Based in Kuwait, Abdulkader has

worked in Bahrain (Citibank & Credit Lyonnais); New York (United Bank of Kuwait); London (Islamic

Investment Banking Unit of the United Bank of Kuwait); WashingtonDC (Guidance Financial) and Los Angeles

(Sumitomo Bank Limited).

Prior to consulting, he served as a senior line manager in various international banks and dealt with the

regulatory approval of various Islamic products in different countries. Abdulkader has also enjoyed a

significant capital markets experience following stints in real estate finance and trade finance.

He is a frequent speaker and writer on Islamic financial and banking matters. He has co-authored or edited

several works in the field including Structuring Islamic Financial Transactions with Stella Cox and Bryan Kraty

(London: Euromoney, 2005); Islamic Bonds: Your Guide to Issuing, Structuring and Investing in Sukuk with

Nathif Adam (London: Euromoney, 2004), Interest in Islamic Economics: Understanding Riba (Oxford: Taylor

& Francis, 2005), Sukuk (London: Sweet & Maxwell, 2009), and Islamic Treasury & Derivative Operations.

Abdulkader Thomas

Islamic Treasury Expert

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Islamic Treasury & Risk Management Products

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