The Role of Sukuk in Islamic Capital Markets
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Figure 2.5: Major Standard-Setting Organizations
Source: ISRA
These organizations have set various standards to facilitate the further growth of the sukuk
market. Nonetheless, little success has been achieved thus far as their standards are only
adopted by a few jurisdictions. Besides, more effort should be made, particularly in
standardizing legal documentation for various sukuk structures that are available in the
market. This standardization would go a long way towards providing simplified documents,
thereby reducing sukuk issuance cost, which is regarded as the main deterrent pushing issuers
and investors towards conventional bonds. Some argue that even sukuk structures and
Shariah rulings on sukuk must also be standardized, especially with the recent Dana Gas
episode (Ulusoy and Ela, 2017). Standardization would enhance transparency in
understanding the complex requirements of sukuk structures, thus boosting market
confidence.
2.4 PARTIES INVOLVED IN THE ISSUANCE OF SUKUK: ROLES AND
RESPONSIBILITIES
Different sukuk structures involve different parties, depending on their underlying Shariah
contracts. For instance, partnership-based sukuk ( musharakah and mudarabah sukuk) require
a manager to manage the venture; lease-based sukuk ( ijarah sukuk) entails a lessor, a lessee
and a servicing agent; and agency-based sukuk (wakalah bil istithmar sukuk) needs an
investment agent to manage the investment assets.