MASTER OF LAWS

Course Code: LAW 613

Course Title: Islamic Capital Markets

Instructor: Hooman Sabeti-Rahmati

Title: Adjunct Associate Professor of Law

Email:

Pre-requisite/CO-REQUISITE/MUTUALLY EXCLUSIVE cOURSE(S)

None, but students will benefit from having taken Introduction to Islamic Law & Commercial Transactions.

COURSE specialisation

LLM in Islamic Law & Finance

Grading BaSIS

Graded

Course UNIT

1 CU

term

Academic Year: AY2012/2013

Academic Term: Term 3

COURSE DESCRIPTION

LEARNING OBJECTIVES

By the end of this course, participants will be able to understand the following in relation to the Islamic capital markets:

  • the various products and instruments;
  • the parties involved, their roles,interactions and motivations;
  • the legal, regulatory and Shari’a background;
  • the differences and similaritiescompared with conventional capital markets;
  • the differences between the domestic and international markets;
  • structuring, documenting, negotiatingand executing sukuk; and
  • the principal legal, commercial and Shari’a constraints and how to work within them.

Recommended Text and Readings

This course will have a large practical component and therefore involvea close examination of legal documentation for particular Islamic capital market transactions, primarily legal contracts, prospectuses and fatwa. These will be distributed in advance of class sessions. Reading material of a general nature will be more limited, but will include excerpts from the following, assigned in advance of class sessions:

Salman Syed Ali, Islamic Capital Markets: Products, Regulation and Development, Islamic Research and Training Institute, 2008.

Mohd Daud Bakar and Engku Rabiah Adawiah Engku Ali, Essential Readings in Islamic Finance, CERT Publications, 2008.

Kabir Hassan and Michael Mahlknecht,Islamic Capital Markets: Products and Strategies, John Wiley & Sons, 2011.

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), Shari’a Standards, 2010.

International Swaps and Derivatives Association (ISDA)andInternational Islamic Financial Market (IIFM), Tahawwut Master Agreement and related documentation, 2012.

Assessment Method

Class participation : 15%
Group assignments (15% for written submission, 10% for oral presentation) : 25%

Individual research paper (no examination will be required): 60%

INSTRUCTIONAL MethodS AND EXPECTATIONS

This is a seminar in which classroom discussion will be an important part of learning. Therefore, each student is expected to have read and thought about the assigned material in advance, and to be prepared to discuss it. Careful thinking and creative problem solving are valuable traits in this area of law, and students will have an opportunity to develop and demonstrate these. For purposes of assessment, thoughtfulness rather than frequency of class participation counts.

Important: Academic Integrity

All acts of academic dishonesty (including, but not limited to, plagiarism, cheating, fabrication, facilitation of acts of academic dishonesty by others, unauthorized possession of exam questions, or tampering with the academic work of other students) are serious offences.

All work (whether oral or written) submitted for purposes of assessment must be the student’s own work. Penalties for violation of the policy range from zero marks for the component assessment to expulsion, depending on the nature of the offence.

When in doubt, students should consult the instructor of the course. Details onthe SMU Code of Academic Integrity may be accessed at

COURSE SCHEDULE

Session / Description
Overview of Islamic capital markets, their history and development, the participants and roles, the various component markets and current instruments and products
Legal, regulatory and Shari’a framework of Islamic capital markets, both domestic and international
Sukuk: basic principles and existing structures
Sukuk: structuring considerations and legal arrangements
Sukuk: negotiation, documentation and execution of transactions, including contracts, disclosure documents and legal opinions
Sukuk: when things go wrong - legal challenges, default and restructuring
Securitisation: basic principles, challenges, documentation and existing transactions
Money and interbank markets: existing instruments, challenges and opportunities
Shari’a-compliant shares, Islamic REITS and Shari’a-compliant derivatives
Course summary, directions of future development and the characteristics of capable Islamic capital markets practitioners

3