Certificate Course on Repo & Hedging Structures And Execution In The Light of AAOIFI And IIFM Frame-work
Session one: Role of Standard Setters and Regulators
- Role of standard setting and regulatory bodies.
- Conventional standard setting and regulatory bodies.
- Islamic finance standard setting and regulatory bodies.
- Collaborative roles of Islamic and conventional standard setting and regulatory bodies.
- Joint projects.
Session Two: The Financial Markets Market Completeness, Derivatives and Hedging
- Market completeness of conventional financial markets.
- What is a derivative and what is hedging?
- Derivatives as a corporate tool – applications and uses.
- Conventional financial derivatives.
- The settlement process of derivatives.
- Market completeness and the Islamic financial markets.
- Uses of derivatives as a corporate tool - applications and Shariah perspective.
- What can not be a derivative and hedging tool under Islamic finance.
- Is there some consensus from a Shariah perspective?
- What is acceptable risk?
- Risk hedging motives in Islamic finance.
- What Is Tahawwut?
- Uses of Tahawwut.
Session Three: AAOIFI Framework on Hedging and Repo
- Islamic Finance, repurchase agreements and hedging.
- AAOIFI Shariah Standards.
- The IFSB position on repo and hedging.
- Islamic hedging instruments.
- Islamic profit rate swaps.
- Tawarruq - Islamic profit rate swaps.
- Islamic cross currency swaps
- Tawarruq – Islamic hedging IPRS and ICCS – how settlement is made.
- Islamic Forward Rate Agreement (IFRA).
Session Four: Islamic Repo Options – Definitions, Structures and Applications
- Repo – the AAOIFI definition.
- Basics of repurchase agreements.
- Repos as part of the derivatives market.
- Repo and reverse repo.
- Permissible uses and applications of repo.
- Islamic alternatives for repo and reverse repo.
- Repo – Tawarruq.
- A regulatory overview
- State Bank of Pakistan.
- UAE Central Bank.
- Bank Negara Malaysia.
- International Islamic Liquidity Management Corporation (IILM).
Session Five: IFSB Stance & Analyzing and Applying IIFM Hedging Standards
- Leading hedge strategies and a comparison of each.
- Important jurisdictional overviews.
- Regulatory and supervisory issues – the Islamic Financial Services Board (IFSB).
- Discussing IFSB policy stance and recommendations.
- ISDA/IIFM Tahawwut (Hedging) Master Agreement (TMA).
- ISDA/IIFM Mubadalatul Arbaah (MA) (profit rate swap) – single stage sale Standard.
- ISDA/IIFM Mubadalatul Arbaah (MA) (profit rate swap) – double stage sale Standard.
- ISDA/IIFM Islamic Cross-Currency Swap (ICRCS).
- ISDA/IIFM Islamic Foreign Exchange Forward (IFX forward) – Single Binding Wa’ad based Standard.
- ISDA/IIFM Islamic Foreign Exchange Forward (IFX forward) – two unilateral and independent Wa’ad based Standard.
- ISDA/IIFM 2017 Credit Support Deed for Cash Collateral (VM).
- ISDA/IIFM IBOR Fallback Standard Documentation.
Session Six: Practical Technicalities of Shariah Compliant Repo and Hedging
- Modern-day Tawarruq Structure & Conventional Securitization Structure Dynamics
- The Conventional Finance Concept of True Sale – Is Real Ownership Matters in Shari’ah
- How True Sale Concept Is Possible in Repo
- How True Sale Concept Is Possible in Hedging
- Key takeaways
Conclusion and Wrap-up