ISLAMIC STRUCTURED INVESTMENT PRODUCTS (ISRA-TR REPORT 2017)

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Author: Aznan Hasan
Year: 2017


(ISRA-TR REPORT 2017)

There are a variety of products offered in the Islamic capital market, both retail and commercial. Beside the common products, we also have new and innovative products such structured products, sukuk, Islamic derivatives and hedge funds. Which ones have stood out? This is a very difficult question to answer. It depends with whom we talk, and for what purpose they want to use these products. For example, if you ask the retail people, they will tell you that mass retail products are the most beneficial ones. If you have corporate people, they will claim the star product is sukuk. This is very true, because we have witnessed the issuance of many sukuk in the market that have been used by business and the corporate people, but which is alien to retail products by their nature. Lately, we have seen the development of what we call structured and complicated products.

Whether these are successful or not depends on lot of factors. It depends on the movement and growth of the market, and it depends also on the particular underlying asset that you want to benchmark. Equity-based structured products will only work if, for example, there is volatility and movement in the equity markets. On the other hand, commodity-structured products will depend on the movements of commodity products, but I believe there are parameters of good products that I think are very basic. For example, the product should be simple. The more complicated the product, the more difficult it will be to understand, and people will avoid investing in that particular product. It has to be able to create value, for example, weather you are corporate or retail, the products that you will offer must be able to create value. 

 

ISRA THOMSON REUTERS ISLAMIC COMMERCIAL LAW REPORT 2017 (Pg 76 - 79)


 

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