ISF-607: Islamic Money Markets and Sukuk

COURSE DESCRIPTION

This course provides a comprehensive examination of Islamic money markets and Sukuk (Islamic bonds), two critical components of the Islamic financial system. Islamic money markets facilitate short-term liquidity management and interbank transactions in compliance with Shari’ah principles, while Sukuk represent asset-backed or asset-based investment certificates that serve as Shari’ah-compliant alternatives to conventional bonds.

The course is divided into two complementary parts. The first three periods draw on Fundamentals of Islamic Money and Capital Markets by Mohd Azmi Omar, Muhamad Abduh, and Raditya Sukmana, which provides a comprehensive introduction to Islamic financial systems, the development of Islamic capital and money markets, regulatory frameworks, and a detailed overview of Islamic money market instruments and Sukuk. The final two periods utilize Sukuk Securities: New Ways of Debt Contracting by Meysam Safari, Mohamed Ariff, and Shamsher Mohamad, which offers an in-depth exploration of Sukuk markets, definitions, classifications, pricing issues, and pragmatic considerations for Sukuk structuring and investment.

Topics covered include the foundational principles of Islamic finance, the structure and development of Islamic money and capital markets, regulatory and transactional platforms, short-term money market instruments, Sukuk structures and classifications, pricing mechanisms, risk factors, and the practical application of Sukuk in global financial markets.

COURSE TEACHING OBJECTIVES

1. To provide a comprehensive understanding of the foundational principles of Islamic finance and their application to money and capital markets
2. To analyze the structure, development, and regulatory framework of Islamic money and capital markets
3. To examine the various instruments and components of Islamic money markets, including short-term liquidity management tools
4. To evaluate the concepts, design features, and contract structures of Sukuk
5. To develop practical skills in analyzing Sukuk pricing, yields, payoffs, and risk factors
6. To explore the role of Islamic money markets and Sukuk in the broader global financial system

COURSE STUDENT LEARNING OUTCOMES

Upon completion of this course, students will be able to:

1. Articulate the foundational principles of Islamic finance and explain how they shape Islamic money and capital markets
2. Describe the structure and development of Islamic financial systems, with particular reference to Malaysia as a case study
3. Identify and explain the various regulatory bodies and transactional platforms that govern Islamic money and capital markets
4. Analyze the instruments and components of Islamic money markets, including their role in liquidity management
5. Explain the concept of Sukuk and distinguish between various Sukuk structures and classifications
6. Evaluate Sukuk pricing mechanisms, yields, payoffs, and associated risk factors
7. Assess the practical considerations for Sukuk issuance, investment, and market participation in global Sukuk markets

Organization of Course Studies

The course is organized into five study periods (typically 2–3 weeks each, though self-paced). Each period includes intensive reading of the assigned textbook chapters, viewing of the supplementary video, and a short response paper or reflective assignment (500–1,000 words) reflecting on the material and its application.