SEC pushes for dev’t of Islamic capital market

The Securities and Exchange Commission (SEC) is providing a clear path to open the country to Shari’ah-compliant investments.

As it pushes the development of the Islamic capital market, the SEC released its proposed rules covering sukuk issuances. These are meant to protect investors and align with global standards.

Sukuk are Shari’ah-compliant certificates that represent a group or individual’s ownership or interest in an asset.

Under the draft rules, sukuk intended for public offering should be registered with the commission. These may be listed, traded and settled in accordance with the rules of an SEC-registered exchange, fixed-income market or other registered organized market.

Issuers can include public and private corporations, government agencies, local governments, state-owned firms, banks and special purpose entities formed specifically for sukuk transactions.

The issuance of sukuk may be made using Shari’ah-compliant structures, including Sukuk Ijarah, or lease-based sukuk wherein assets are sold and leased back to the issuer. Others are the Sukuk Murabahah or cost-plus margin financing sukuk for fixed-price sales transactions and Sukuk Istisna or financing sukuk to raise funds for manufacturing or construction projects.

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The following structure will also be allowed — Sukuk Wakalah bil Istithmar or agency-based sukuk wherein a wakeel (investment agency) is appointed to invest on behalf of holders in specified assets.

Likewise with Sukuk Mudarabah or profit-sharing sukuk, where one party provides funds and the others expertise; Sukuk Musharakah, or joint venture sukuk representing co-ownership of assets or projects.

The commission is accepting comments from the public until Dec. 12.