Treasury products offer end users a range of opportunities to hedge, speculate or manage risk exposure, and Shariah compliant equivalents are no different. The structure, use and application of Islamic treasury products are, however, governed by very important rules, conventions, documentation and agreements. With Shariah compliant treasury and hedging products becoming more widespread by financial institutions for both risk hedging and for structuring client investment solutions, these rules, conventions and agreements are crucial to the development of these products.
This one day, multi-speaker event will analyse and discuss the key legal, documentation and risk management issues of structuring and offering Islamic treasury products. Included will be a close examination of master agreements, netting arrangements, counter-party risk assessment and management, as well as an overview of dispute resolution issues for these sophisticated structures. The seminar will also offer a reminder of important Shariah and structuring issues relevant to Islamic treasury products.
KEY LEARNING OUTCOMES
Reminder of the key Islamic finance contracts and concepts that allow the development of Islamic treasury and hedging products
Application of the key international and local master agreements to the Malaysian environment: ISDA and IIFM
Key elements of conventional OTC derivatives agreements and the application to Islamic finance
Assessing dispute resolution mechanisms for Islamic treasury products in Malaysia
Agenda
9.15am – 10.45am
Session 1: Assessing Key Legal and Documentation Issues for Islamic Treasury Products in Malaysia
Reminders on the legal and regulatory requirements that need to be considered when developing legal documents for Islamic Treasury products in Malaysia
Some of the practical issues and solutions in developing adequate legal documents for Islamic treasury products
Drafting key documentation in the development and marketing of Islamic treasury products in Malaysia
Hedging vs gambling and the position under Malaysian law
Application of the key international and local master agreements to the Malaysian environment: ISDA/IIFM and IDMA
Madzlan Hussain — Partner and Head, Islamic Financial Services Practice, Zaid Ibrahim & Co
CCR exposure mitigation methods – payment & ‘close-out’ netting, collateral exchange and central clearing
Netting benefits for multiple transactions and concept of ‘netting set exposure’
Bankruptcy laws and netting – enforceability of close-out netting under Malaysian bankruptcy law
Collateral and how collateral can be linked to close-out netting exposure under derivatives master agreements to mitigate counterparty credit exposure and regulatory capital requirements
Key elements of conventional OTC derivatives agreements
Concepts and implementation of bi-lateral counterparty master agreements, representations, early termination and default conditions, payment and close-out netting methods, legal jurisdiction and enforceability opinions (ISDA 1992 and 2002 Master Agreements compared)
Documenting OTC transactions novated to central clearing counterparties (CCPs) under G20 requirements
Douglas Bongartz Renaud — Former Global Head of Currency Derivatives and Global Head of Rate Derivatives and Structured Products, ABN AMRO
Shariah-compliant structuring of close-out netting clauses – example of applying Musawamah and Waad contracts within the IIFM / ISDA Tahawwut Master (Hedging) Agreement
Industry discussions concerning possible ways of applying Shariah principles to enable collateralisation mitigation of counterparty credit exposure in Islamic derivatives – challenges in structuring a Shariah compliant Credit Support Annex (‘CSA’)
Important issues in negotiating master agreements with different types of counterparties
Islamic Financial Services Act (IFSA) and differentiation between Islamic deposits and investment accounts
Douglas Bongartz Renaud — Former Global Head of Currency Derivatives and Global Head of Rate Derivatives and Structured Products, ABN AMRO
3.30pm – 4.00pm
Coffee
4.00pm - 4.45pm
Session 4: Accessing Dispute Resolution Mechanisms for Islamic Treasury products in Malaysia
Brief overview of dispute resolution options provided by SIDREC
Assessing the 'value-add' of Alternate Dispute Resolution to investors and market intermediaries
Highlighting practical examples of SIDREC's approach
Moving towards the future: going forward
Sujatha Sekhar Naik — Chief Executive Officer, Securities Industry Dispute Resolution Center