shariah compliant structuring capabilities structured... · murabaha usually short term, used fo...

November 2017

SHARIAH COMPLIANT STRUCTURING CAPABILITIES

2

DISCLAIMER

▪ Market Securities (Dubai) Limited (“MSD”) is regulated by the DFSA and authorised to deal in investments as well as advise on

and arrange investments.

▪ MSD is not endorsed by the DFSA as a firm conducting Islamic financial business.

▪ MSD structures the financial components of the products that it distributes. MSD does not endorse the Sharia compliance of the

product offered, and does not conduct Islamic business under DFSA's Islamic Finance Regulatory Regime.

▪ The Islamic business component of the products is structured by the issuers who have their own Sharia Supervisory Board and

are subject to their own Regulatory Regime.

▪ Any approval of a Structured Product as Islamic would be made by fatwa from the Sharia Supervisory Board of the Issuer and

not by MSD.

▪ The Client should consult with his own advisors on the Sharia Compliance of the products distributed by MSD.

3

CORPORATE PROFILE

▪ Market Securities LLP (“MSLLP”) was established in 2002 in strategic partnership with Kyte Broking Ltd, based on experience and

knowledge 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 first

class 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 Kyte

Broking Limited.

▪ Market Securities (Dubai) Limited is regulated by the DFSA and authorised to deal in investments as well as advise on and

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-asset

brokerage 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, Foreign

Exchange, 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.

4

STRUCTURED SOLUTIONS

5

RANGE OF SHARIAH PRODUCTS AVAILABLE IN THE MARKET

6

RANGE OF SHARIAH PRODUCTS

MurabahaUsually short term, used fo capital needs. Structured against a trade flow, used toarrange financing for raw-material purchases.

Fixed

Commodity Murabaha

Liquidity management tooland fund raising tool. Involves buy/sell of commoditieson major commodity exchanges.

Fixed

Ijara (lease)Medium to long term financingunder Islamic type of conventional lease product,backed by real asset. (Real Estate finance, Capital Equipmen 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

7

SHARIAH SOLUTIONS

The Solutions shall be endorsed by the Islamic Supervisory Board of the Issuer. MSD does not offer or provide Islamic financial services.

8

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* The Solutions shall be endorsed by the Islamic Supervisory Board of the Issuer. MSD does not offer or provide Islamic financial services.

9

SHARIAH CERTIFICATES(LIGHT)

The Fatwas are issued by the Islamic Supervisory Board of the Issuer. MSD does not offer or provide Islamic financial services.

10

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* The Fatwas are issued by the Islamic Supervisory Board of the Issuer. MSD does not offer or provide Islamic financial services.

FATWA* ON THE PROGRAMME LEVEL

11

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 Euroclear

on 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 Note

program.

▪ 4: Hedging Agent executes a transaction in the market via Wa’d and books all interim payments as Commodity

Murabaha.

12

ISLAMIC PRODUCT VEHICLE (COMPREHENSIVE)

13

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* The Islamic Vehicles shall be created and be endorsed by the Islamic Supervisory Board of the Issuer. MSD does not offer or provide Islamic financial services.

14


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


15


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


Market Securities Structured Solutions is part of Market Securities Dubai Ltd, a DIFC based entity which is authorised 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 SkutelisDanny Skutelis has started his professional career at Goldman Sachs in London in a Fixed Income Currency and Commodities department on a Macro IssuanceDesk, responsible for new index and tracker funds. Goldman Sachs was followed by UBS in London where Danny has started in Alternative InvestmentStrategies and moved into sales to Russia/CIS. After almost 4 years 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 the company called TFS Structured Products. After a rapid expansion inRussia, 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 StructuredSolutions Desk at Market Securities Dubai a hybrid-engineering boutique.

Pulkit SangalPulkit Sangal is an Associate within the Structured Solutions team at Market Securities Structured Solutions (part of Market Securities Dubai Ltd) coveringInstitutions across the Middle East. He began his career at Commerzbank AG in Dubai as a member of the Equity Markets & Commodities divisionrepresenting the Private Banks Sales team in the GCC for 2 years. In his role at Commerzbank, Pulkit was responsible for providing tailored Cross AssetInvestment Solutions to regional institutions. Pulkit has resided in the Middle East for over 20 years; his qualifications include the Chartered AlternativeInvestments Analyst (CAIA) designation and an undergraduate degree in Economics from the Symbiosis School of Economics in Pune, India.

16

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 and Market Counterparties 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.

Market commentary is not subject to any prohibition on dealing ahead of its dissemination to clients. The author of this communication may

have discussed the information contained 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 communication),

and other clients may be long or short the financial instruments referred to, may have acquired such positions at prices and market conditions

that are no longer available, and may have interests different or adverse to your interests.

This material is directed exclusively at market professionals and institutional investors and is not for distribution to retail clients, as defined by

the rules of the Dubai Financial Services Authority. Any investment services to which the material may relate will not be made available to such

retail clients.

All of the views in this material about matters that include, without limitation, securities and companies, reflect the personal views of MSD staff.

No part of these staff member’s compensation was, is, or will be directly or indirectly related to material contained herein.

The material in this report is for the general information of prospects and clients of MSD only. It does not take into account the particular

investment objectives, financial situation or needs of individual prospects and/or clients. Any prices provided herein (other than those that are

identified as historical) are indicative only and do not represent firm quotes as to either price or size. This material should not be construed in

any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its

distribution, form the basis of, or be relied upon in connection with, any contract relating to such action.

17

DISCLAIMER

18

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 contents hereof .

Opinions expressed are MSD staff members current opinions as of the date appearing on this material only. There can be no assurance that

future results or events will be consistent with any such opinions, forecasts or estimates. Past performance is no guide to future performance.

The information and opinions contained herein are subject to change without notice.

Unless otherwise stated, share prices are as at the close of business on the date of the research note.

Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be

redistributed or disclosed to anyone without the prior consent of MSD. MSD, its directors, officers, employees and associates accept no liability

whatsoever for any direct, indirect, incidental or consequential loss or damage of any kind arising out of the use of all or any of this material,

provided that this exclusion of liability shall not exclude or limit any liability under any applicable law or regulation that may not be excluded or

restricted.

The services, securities and investments discussed in this material may not be available to, nor suitable for all investors. Investors should make

their own investment decisions based upon their own financial objectives and financial resources and it should be noted that investment involves

risk, including the risk of capital loss. In relation to securities denominated in foreign currency, movements in exchange rates will have an effect

on the value, either favourable or unfavourable.

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

shariah compliant structuring capabilities structured... · murabaha usually short term, used fo...

Documents