ISSUES IN SUKUK DESIGN AND TRADING

Obiyathulla Ismath Bacha, Ali Zhang Hengchao and Mirzet Šeho

Chapter 7 in Islamic Capital Markets:A Comparative Approach, 2025, pp 165-210 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter examines issues related to sukuk, their design, trading, and pricing. The variance in risk profile according to the underlying contract is described. Exotic sukuk structures and the innovations in their design are evaluated. The need and rationale for risk sharing and perpetual sukuk are described. The underlying logic of sukuk pricing and the variance in pricing formulation according to the sukuk’s underlying contract is discussed. The chapter ends with a discussion of sukuk defaults. On completing the chapter, you should have a good understanding of how sukuk design affects risk, required returns, and the formulation of pricing. You should also appreciate the need for continuous innovation in sukuk structure.

Keywords: Islamic Banking; Islamic Finance; Capital; Capital Markets; Contracts; Instrument Design; Interbank; Interbank Money Market; Islamic Interbank Money Market; Bond; Bond Market; Sukuk; Sukuk Market; Common Stocks; Equity Markets; Islamic Equities Market; Derivative Instruments; Shariah; Shariah-compliant Derivative Instrument; Exchange Rates; Foreign Exchange Market; Digital Financial Assets; Blockchain; Financial Solution; Digital Financial Solution; Conventional Capital Market; Dual Market (search for similar items in EconPapers)
JEL-codes: F3 G15 G18 G23 G24 (search for similar items in EconPapers)
Date: 2025
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