The Role of Sukuk in Islamic Capital Markets
38
Market stakeholder Examples of development actions Impact on capital
markets
Exchanges  Issuer-friendly listing requirements in
terms of documentation and processes.
 Provide incentives for sukuk compared
to conventional bond issuance, in terms
of listing fees and expenses.
 Encourage good corporate governance.
 Generate confidence
among existing and
potential investors.
Service providers
(e.g. investment
banks, securities
companies,
advisory houses,
brokers, traders,
rating agencies)
 Collaborate with regulators in building
market awareness of sukuk, issuance
processes, tax-related issues and
benefits, and timelines, among others.
 Market maker to identify potential sell-
side and buy-side clients for ICM
products and provide liquidity through
market participation.
 Capacity building in human
development to facilitate ICM talent
management.
 Diversify products to meet the various
financing objectives of market players.
 Stimulate product
development in both
the sell and buy sides.
 Provide strong talent
base to develop
innovative products
that appeal to the
international
community.
Non-bank financial
intermediaries
(NBFIs) (e.g.
institutions,
pension funds, asset
and wealth
managers, private
bankers)
 Develop strong market appetite for
long-dated debt securities and
encourage project-based funding.
 Acceptance of lower-grade investment
credits (high-risk, high-return
mentality) to allow mid-cap companies
to tap the capital markets.
 Facilitate issuance of
infrastructure-based
sukuk with maturities
exceeding 7 years.
 Develop price guidance
for corporates across
the entire investment-
grade rating spectrum.
Financial
institutions and
their holding
companies
 Encourage development of capital-
market instruments as potential
financing substitutes.
 Create a sustainable supply of sukuk to
finance capital-adequacy requirements.
 Define a strategy and operational model
that provides value-based guidance to
clients between balance-sheet financing
and capital markets.
 Promote value creation
through capital-market
activities to enhance
shareholder value.
 Promote efficient use of
capital between
business lines.
 Generate capital-market
activity on both the sell
and buy sides.
Source: RAM
As explained in Table 3.1, NBFIs are the cornerstone institutional investors, apart from
financial institutions, that can elevate the growth of the sukuk market to the next level. Box 3.2
provides the World Bank’s definition of NBFIs.