Legal, Documentation & Risk Issues
for Islamic Treasury & Hedging Products

SIDC CPE - accredited: 10 CPE Points
Date: 22nd February 2017 Venue: InterContinental, Kuala Lumpur

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
10.45am - 11.15am Coffee
11.15am - 1.00pm Session 2: Islamic Treasury Product Documentation & Counterparty Credit Risk Exposure Market & Regulatory Developments
  • Overview of counterparty credit risk (CCR) exposure in bank Trading Books
    • CCR exposure measurement – mark-to-market (‘MtM’) plus potential future exposure (‘PFE’)
    • 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
1.00pm – 2.00pm Lunch
2.00pm – 3.30pm Session 3: Islamic Treasury Product Documentation & Counterparty Credit Risk Exposure Market & Regulatory Developments (continued)
  • Documenting Islamic Treasury and hedging products
    • Product range coverage issues – current status
    • Shariah compliance of underlying transactions
    • 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

 

 

 


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